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Political contributions and analyst behavior

Version 2 2024-06-13, 10:28
Version 1 2017-03-31, 13:24
journal contribution
posted on 2024-06-13, 10:28 authored by D Jiang, A Kumar, KKF Law
We show that the personal traits of analysts, as revealed by their political donations, influence their forecasting behavior and stock prices. Analysts who contribute primarily to the Republican Party adopt a more conservative forecasting style. Their earnings forecast revisions are less likely to deviate from the forecasts of other analysts and are less likely to be bold. Their stock recommendations also contain more modest upgrades and downgrades. Overall, these analysts produce better quality research, which is recognized and rewarded by their employers, institutional investors, and the media. Stock market participants, however, do not fully recognize their superior ability as the market reaction following revisions by these analysts is weaker.

History

Journal

Review of accounting studies

Volume

21

Pagination

37-88

Location

New York, N.Y.

ISSN

1380-6653

eISSN

1573-7136

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2015, Springer

Issue

1

Publisher

Springer