Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • Article
  • Harvard Business School Working Knowledge

The Use of Broker Votes to Reward Brokerage Firms' and Their Analysts' Research Activities

By: David A. Maber, Boris Groysberg and Paul M. Healy
  • Format:Electronic
ShareBar

Abstract

In traditional markets, the price mechanism directs the flow of resources and governs the process through which supply and demand are brought into equilibrium. In the investment-research industry, broker votes perform these functions. Using detailed clinical data from a midsized investment bank for the years 2004 to 2007, we present evidence that institutional investors use broker votes to budget future aggregate commission payments across brokerage firms; that these votes are responsive to actions that brokerage-house analysts take to communicate with client investors; and that brokerage firms use client-supplied votes as a quasi allocation base to indirectly reward individual analysts for contributions to brokerage-wide commission payments. Overall, our results suggest that broker votes function as the nexus for a set of implicit contractual relationships between sell-side brokers, their affiliated analysts, and their buy-side clients.

Citation

Maber, David A., Boris Groysberg, and Paul M. Healy. "The Use of Broker Votes to Reward Brokerage Firms' and Their Analysts' Research Activities." Harvard Business School Working Knowledge (March 19, 2014).
  • Read Now

About The Authors

Boris Groysberg

Organizational Behavior
→More Publications

Paul M. Healy

Accounting and Management
→More Publications

More from the Authors

    • April 2022
    • Faculty Research

    Gender Equality in Business: 100 Years of Progress?

    By: Boris Groysberg and Colleen Ammerman
    • April 2022
    • Faculty Research

    Gender Equality in Business: 100 Years of Progress?

    By: Boris Groysberg and Colleen Ammerman
    • April 2022
    • Faculty Research

    Marsha Simms: Trailblazer in Corporate Law

    By: Robin Ely, Boris Groysberg, Colleen Ammerman and Olivia Hull
More from the Authors
  • Gender Equality in Business: 100 Years of Progress? By: Boris Groysberg and Colleen Ammerman
  • Gender Equality in Business: 100 Years of Progress? By: Boris Groysberg and Colleen Ammerman
  • Marsha Simms: Trailblazer in Corporate Law By: Robin Ely, Boris Groysberg, Colleen Ammerman and Olivia Hull
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College