The greater the volume, the greater the analyst

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Are sell-side security analysts paid for turnover-generating research? Using hand-collected annual income data from tax records in Sweden for the 1997-2007-year period, I show that analysts’ compensations increase in the trading turnover that their recommendations generate. Analysts are paid 0.002 % of broker-trading volume, or approximately 1 % of broker's commission revenues. The findings empirically validate the previously assumed turnover-compensation link and estimate its magnitude. The results may have policy implications related to the Markets in Financial Instruments Directive.

Original languageEnglish
Article number103377
JournalFinance Research Letters
Volume51
DOIs
Publication statusPublished - Jan 2023

Bibliographical note

Publisher Copyright:
© 2022 The Author(s)

Keywords

  • Analyst
  • Broker
  • Compensation
  • Stock recommendation
  • Turnover

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