Political contributions and analyst behavior

By Danling Jiang, Alok Kumar, Kelvin K. F. Law. Review of accounting studies, 2015

118 citations recorded by the source corpus.

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.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/f1b52e6934c4400cc086f20224641adb08eed981

Citations in the corpus

• Partisan Professionals: Evidence from Credit Rating Analysts (2018, unknown): “…sell-side equity analysts who make political contributions to the Republican Party are more likely to issue conservative forecasts and recommendations (Jiang, Kumar, and Law (2016)), and Republican firm managers maintain more conservative corporate policies (Hutton, Jiang, and Kumar (2014)).”