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  • Journal of Accounting & Economics

Corporate Culture and Analyst Catering

By: Joseph Pacelli
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Abstract

This study examines the relation between financial institutions’ corporate culture and the quality of analysts’ research services. Using data collected from the Financial Industry Regulatory Authority, I measure the weakness of financial institutions’ corporate culture based on violations observed in securities activities unrelated to equity research. I find evidence demonstrating an association between weak corporate culture and analysts’ providing research products catered to institutional clients at the expense of individual investors. Specifically, FINRA violations are associated with both (i) less accurate forecasts and less informative reports, and (ii) higher institutional commission revenues and more broker-hosted conferences for select institutional clients.

Keywords

Analysts; Corporate Culture; Global Settlement; Financial Institutions; Organizational Culture; Conflict of Interests; Performance; Quality

Citation

Pacelli, Joseph. "Corporate Culture and Analyst Catering." Journal of Accounting & Economics 67, no. 1 (February 2019): 120–143.
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About The Author

Joseph Pacelli

Accounting and Management
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