Publications
Publications
- Forthcoming
- Management Science
Brokerage House IPOs and Analyst Forecast Quality?
By: Joseph Pacelli, Mark Bradshaw, Michael Drake and Brady Twedt
Abstract
We provide new evidence on how initial public offerings (IPOs) influence employee behavior using the brokerage industry as an empirical setting. We examine whether IPOs influence the objectivity of equity research analysts. Contrary to conventional wisdom suggesting that IPOs lead to myopic employee behavior due to increased demands from new stakeholders, we provide robust evidence that analysts actually produce less optimistically biased earnings forecasts relative to their peers around the time of their employer’s IPO. Our results are consistent with analysts’ responding to increased scrutiny around the IPO, which in turn incentivizes more objective behavior. These findings are consistent with beneficial impacts of monitoring of publicly listed firms and enhances our understanding of how IPOs are associated with changes in behavior within a firm.
Keywords
IPOs; Research Analysts; ＂Brokerage Industry; Initial Public Offering; Employees; Behavior; Outcome or Result
Citation
Pacelli, Joseph, Mark Bradshaw, Michael Drake, and Brady Twedt. "Brokerage House IPOs and Analyst Forecast Quality?" Management Science (forthcoming).