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Publications
  • October 2008
  • Article
  • Academy of Management Journal

Sociopolitical Dynamics in Relations Between Top Managers and Security Analysts: Favor Rendering, Reciprocity, and Analyst Stock Recommendations

By: James Westphal and Michael B. Clement
  • | Pages:26
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Abstract

We examine how the disclosure of negative firm information may prompt top executives to render personal and professional favors for security analysts, who may reciprocate by rating firms relatively positively. We further examine how negative ratings may prompt executive negative reciprocity toward an analyst and how such retaliation may deter other analysts' negative ratings. Because analyst recommendations influence investor behavior, firm reputation, and access to capital, our theory and supportive findings suggest that corporate leaders enhance and perpetuate external support for their firms via social influence processes that develop and maintain social exchange relations with a key type of external constituent.

Keywords

Corporate Disclosure; Relationships; Power and Influence; Ethics

Citation

Westphal, James, and Michael B. Clement. "Sociopolitical Dynamics in Relations Between Top Managers and Security Analysts: Favor Rendering, Reciprocity, and Analyst Stock Recommendations." Academy of Management Journal 51, no. 5 (October 2008): 873–897.
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More from the Authors

    • October–November 2019
    • Journal of Business Finance & Accounting

    A New Perspective on Post-Earnings-Announcement-Drift: Using a Relative Drift Measure

    By: Michael Clement, Joonho Lee and Kevin Ow Yong
    • Journal of Accounting & Economics

    Managing the Narrative: Investor Relations Officers and Their Interactions with Sell-Side Analysts and Institutional Investors

    By: Lawrence D. Brown, Andrew C. Call, Michael B. Clement and Nathan Y. Sharp
    • August 2016
    • Journal of Accounting & Economics

    The Activities of Buy-Side Analysts and the Determinants of Their Stock Recommendations

    By: Lawrence D. Brown, Andrew C. Call, Michael B. Clement and Nathan Y. Sharp
More from the Authors
  • A New Perspective on Post-Earnings-Announcement-Drift: Using a Relative Drift Measure By: Michael Clement, Joonho Lee and Kevin Ow Yong
  • Managing the Narrative: Investor Relations Officers and Their Interactions with Sell-Side Analysts and Institutional Investors By: Lawrence D. Brown, Andrew C. Call, Michael B. Clement and Nathan Y. Sharp
  • The Activities of Buy-Side Analysts and the Determinants of Their Stock Recommendations By: Lawrence D. Brown, Andrew C. Call, Michael B. Clement and Nathan Y. Sharp
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