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Article in Journal ()

The Influence of Buy-side Analysts on Mutual Fund Trading

Citation
Frey S & Herbst P (2014) The Influence of Buy-side Analysts on Mutual Fund Trading, Journal of Banking and Finance, 49, pp. 442-458.

Abstract
We present evidence on the trading and performance impact of buy-side analysts. Using data provided by a large global asset manager, we relate buy-side analysts' recommendations to fund transactions on a daily basis. We show that buy-side analysts significantly influence trading decisions: Fund managers strongly follow recent recommendation revisions, even after controlling for other trading determinants. Positive abnormal returns to buy-side analysts' revisions are also reflected in the performance of mutual fund trades: Trades triggered by buy-side recommendations have higher returns than other trades. Overall, the impact of buy-side analysts is more pronounced than that of sell-side analysts.

Keywords
Buy-side analysts; Analyst recommendations; Mutual funds; Investment decisions; Investment performance G23; G11; G29; M41

StatusPublished
AuthorsFrey Stefan, Herbst Patrick
Publication date12/2014
Publication date online24/01/2014
PublisherElsevier
ISSN 0378-4266
LanguageEnglish

Journal
Journal of Banking and Finance: Volume 49

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