This paper develops and applies a new approach to disentangling the influence of analysts on each other's earnings forecasts from the effects of correlated information shocks. We estimate that a new forecast by an analyst that is c cents above (below) another analyst's forecast causes the other...

This paper examines the mechanisms by which acquirer CEOs are incentivized and their impact on merger decisions. We argue that the pre-merger structure of CEO wealth impacts a CEO's risk tolerance and ultimately her willingness to undertake a merger as well as the framework of the deal. As the...

This paper investigates the effects of analyst recommendations issued after a merger announcement on deal completion. We find the probability of completion increases (decreases) with the favorability of acquirer (target) recommendations. Results from instrumental variables tests support...

We explore how analyst recommendation changes affect a security's trading volume at the market maker of the analyst's own firm. Using Nasdaq PostData, we find a dramatic increase in trading volume handled by the market maker of the analyst's firm relative to other market makers on recommendation...

This paper examines the debt underwriting relationship for banks. Publicly-traded investment and commercial banks (“banks”) are unique as they are the only firms capable of underwriting their own securities. In nearly 30% of their debt issuances, banks hire another underwriter and do so...

We rely on recently developed general equilibrium asset pricing models, from which we derive some predictions about how heterogeneity of beliefs affects return and volatility dynamics. The first contribution of our paper is the derivation of a simple decomposition of the conditional stock...

We study how heterogeneous beliefs affect returns and examine whether they are a priced factor in traditional asset pricing models. To accomplish this task, we suggest new empirical measures based on the disagreement among analysts about expected earnings (short-term and long-term) and show they...

We study asset pricing in economies featuring both risk and uncertainty. In our empirical analysis, we measure risk via return volatility and uncertainty via the degree of disagreement of professional forecasters, attributing different weights to each forecaster. We empirically model the typical...

In this study, we attempt to add some clarification to the ongoing debate of REITs. While REITs have some characteristics similar to those of common stocks, they behave fundamentally different from stocks in general. Using a matched sample comparison, we find that REITs have lower return...

This paper explores the impact of analyst investment recommendations on intra-daily stock returns and volatility when those recommendations are conditioned on the release of public news. Using a sample of 3,679 recommendations of computer and computer-related firms, we investigate differences in...