Publications
Publications
- November 2023
- Management Science
Brokerage House Initial Public Offerings and Analyst Forecast Quality
By: Mark Bradshaw, Michael Drake, Joseph Pacelli and Brady Twedt
Abstract
We examine how brokerage firm initial public offerings (IPOs) influence the research quality of sell-side analysts employed by the brokerage. Our main results focus on earnings forecast bias and absolute forecast errors as proxies for research quality. Using a staggered difference-in-differences analysis, we document significant decreases in forecast bias and absolute forecast error during the two-year period centered on the analysts’ bro-kerage house IPO. In additional analyses, we explore several potential explanations for the short-term benefits of brokerage house IPOs. We find some evidence that IPOs delay the departure of more talented analysts and that the effects are more concentrated among ana-lysts and brokers that face more scrutiny.
Keywords
IPOs; Research Analysts; ＂Brokerage Industry; Initial Public Offering; Employees; Behavior; Outcome or Result
Citation
Bradshaw, Mark, Michael Drake, Joseph Pacelli, and Brady Twedt. "Brokerage House Initial Public Offerings and Analyst Forecast Quality." Management Science 69, no. 11 (November 2023): 7079–7094.