The Journal of Finance

Non‐Deal Roadshows, Informed Trading, and Analyst Conflicts of Interest

Published: 11/02/2021   |   DOI: 10.1111/jofi.13089

DANIEL BRADLEY, RUSSELL JAME, JARED WILLIAMS

Non‐deal roadshows (NDRs) are private meetings between management and institutional investors, typically organized by sell‐side analysts. We find that around NDRs, local institutional investors trade heavily and profitably, while retail trading is significantly less informed. Analysts who sponsor NDRs issue significantly more optimistic recommendations and target prices, together with more “beatable” earnings forecasts, consistent with analysts issuing strategically biased forecasts to win NDR business. Our results suggest that NDRs result in a substantial information advantage for institutional investors and create significant conflicts of interests for the analysts who organize them.

Before an Analyst Becomes an Analyst: Does Industry Experience Matter?

Published: 09/20/2016   |   DOI: 10.1111/jofi.12466

DANIEL BRADLEY, SINAN GOKKAYA, XI LIU

Using hand‐collected biographical information on financial analysts from 1983 to 2011, we find that analysts making forecasts on firms in industries related to their preanalyst experience have better forecast accuracy, evoke stronger market reactions to earning revisions, and are more likely to be named Institutional Investor all‐stars. Plausibly exogenous losses of analysts with related industry experience have real financial market implications—changes in firms’ information asymmetry and price reactions are significantly larger than those of other analysts. Overall, industry expertise acquired from preanalyst work experience is valuable to analysts, consistent with the emphasis placed on their industry knowledge by institutional investors.

Are Analysts’ Recommendations Informative? Intraday Evidence on the Impact of Time Stamp Delays

Published: 09/30/2013   |   DOI: 10.1111/jofi.12107

DANIEL BRADLEY, JONATHAN CLARKE, SUZANNE LEE, CHAYAWAT ORNTHANALAI

We demonstrate that time stamps reported in I/B/E/S for analysts’ recommendations released during trading hours are systematically delayed. Using newswire‐reported time stamps, we find 30‐minute returns of 1.83% (−2.10%) for upgrades (downgrades), but for this subset of recommendations we find corresponding returns of −0.07% (−0.09%) using I/B/E/S‐reported time stamps. We also examine the information content of recommendations relative to management guidance and earnings announcements. Our evidence suggests that analysts’ recommendations are the most important information disclosure channel examined.

The Quiet Period Goes out with a Bang

Published: 02/12/2003   |   DOI: 10.1111/1540-6261.00517

Daniel J. Bradley, Bradford D. Jordan, Jay R. Ritter

We examine the expiration of the IPO quiet period, which occurs after the 25th calendar day following the offering. For IPOs during 1996 to 2000, we find that analyst coverage is initiated immediately for 76 percent of these firms, almost always with a favorable rating. Initiated firms experience a five‐day abnormal return of 4.1 percent versus 0.1 percent for firms with no coverage. The abnormal returns are concentrated in the days just before the quiet period expires. Abnormal returns are much larger when coverage is initiated by multiple analysts. It does not matter whether a recommendation comes from the lead underwriter or not.