%0 Journal Article
%T Mutual
%A Kam C. Chan
%A Nianhang Xu
%A Qingbo Yuan
%A Xuanyu Jiang
%J Journal of Accounting, Auditing & Finance
%@ 2160-4061
%D 2018
%R 10.1177/0148558X16658372
%X We contend that mutual-fund-affiliated analysts have conflicts of interest in their role of information production. Similar to the investment-bank-affiliated analysts (Malmendier & Shanthikumar, 2014), mutual-fund-affiliated analysts are very likely to speak in two tongues, issuing optimism-biased recommendations to please their mutual fund clients due to the clientsĄ¯ holdings of the stocks but less optimistic forecasts for their covered firms to provide firm-specific information for mutual funds. The net effect of these mutual-fund-affiliated analystsĄ¯ conflicting actions is not clear. We use a unique Chinese dataset that discloses the business affiliations between mutual funds and brokerage firms through commission allocations to examine whether mutual-fund-affiliated analysts produce more (or less) firm-specific information in their research compared with non-affiliated analysts. Our results indicate that mutual-fund-affiliated analysts produce more firm-specific information, manifested by lower stock price synchronicity for the firms they cover. We further find that the mutual-fund-affiliated analyst effects are more pronounced for stocks that represent significant exposure to an affiliated mutual fundĄ¯s investment, where mutual funds presumably need more firm-specific information to make investment decisions. Finally, we document that mutual-fund-affiliated analysts conduct more site visits on the stocks held by their mutual fund clients, which explains the greater information dissemination by mutual-fund-affiliated analysts
%K affiliated analyst
%K stock price synchronicity
%K mutual fund
%K analyst coverage
%U https://journals.sagepub.com/doi/full/10.1177/0148558X16658372