| Authors |
Crawford, Gray, Johnson, Price |
| Journal |
Management Science |
| Year |
2018 |
| Type |
Published Paper |
| Abstract |
We examine why buy-side analysts share investment ideas on SumZero.com, a private social networking website designed to facilitate interaction and information sharing among buy-side professionals. We first document that our sample of more than 1,000 buy-side analysts issue recommendations that have investment value. In particular, recommendations generate significant returns when they are posted to the website and the returns to both buy and sell
recommendations drift in the direction of the recommendation. These returns are the most dramatic for contrarian recommendations (i.e., those issued contrary to the sell-side consensus). We explore labor-market motivations for sharing information and document that analysts who have strong incentives to seek new jobs (those at small funds), are significantly more likely to issue recommendations. We also show that analysts who share investment ideas are more likely to change jobs, and that the ratings their recommendations receive are positively related to changing employment. Overall, we show that social networking is an effective reputation building and job seeking tool for buy-side analysts. |
| Keywords |
Security analysts, stock recommendations, hedge funds |
| URL |
https://doi.org/10.1287/mnsc.2017.2749 |
| Tags |
Archival Empirical |
Investment Decisions (Institutional) |
Social Network Structure
|