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 language | English |
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Article number | 103377 |
Journal | Finance Research Letters |
Volume | 51 |
DOIs | |
Publication status | Published - Jan 2023 |
Bibliographical note
Publisher Copyright:© 2022 The Author(s)
Keywords
- Analyst
- Broker
- Compensation
- Stock recommendation
- Turnover