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  1. Was the Global Settlement Effective in Mitigating Systematic Bias in Affiliated Analyst Recommendations?Minzhi Wu, Mark Wilson & Yi Wu - 2017 - Journal of Business Ethics 146 (3):485-503.
    Regulators have recently relaxed some provisions of the Global Research Analyst Settlement of 2003 and associated reforms, which arose from charges that conflicts of interest within investment banks had induced the issuance of fraudulent or otherwise misleading analyst research reports. We examine the effectiveness of the Global Settlement in reducing the systematic optimism observed in stock recommendations of analysts whose employer is a merger and acquisition advisor for the covered firm, by comparing the optimism exhibited in stock recommendations issued by (...)
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  • Changes in Recommendation Rating Systems, Analyst Optimism, and Investor Response.Yen-Jung Tseng & Mark Wilson - 2020 - Journal of Business Ethics 166 (2):369-401.
    We study whether changes in analyst recommendation ratings systems encouraged by the implementation of NASD 2711 in 2002 are associated with improved objectivity and independence in analyst recommendations. Using recommendations issued during windows surrounding major investment banking events, we show that reductions in analyst optimism following the reforms concentrate in the recommendations of analysts whose employer adopted a three-tier rating system at the time of the reforms, and that this effect is generally stronger for analysts whom the underlying incentives to (...)
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  • Ethics Events and Conditions of Possibility: How Sell-Side Financial Analysts Became Involved in Corporate Governance.Zhiyuan Tan - 2021 - Business Ethics Quarterly 31 (1):106-137.
    ABSTRACTMobilizing Foucault’s genealogy, this article investigates how an “ethics event”—the involvement by some sell-side financial analysts in the United States and United Kingdom across the past two decades in corporate governance—emerged. It is found that the complex relations formed between specific historical precedents, normative discourses, and fields of power rendered certain issues in financial markets morally problematic and constructed analysts’ corporate governance work as a potential solution. Contributing to research in finance ethics, this article develops a novel perspective to conceptualize (...)
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  • Comparative Perspectives on the Ethical Orientations of Human Resources, Marketing and Finance Functional Managers.Eleanor O’Higgins & Bairbre Kelleher - 2005 - Journal of Business Ethics 56 (3):275-288.
    The human resources profession emphasizes the personal and interpersonal aspects of work, that make it conscious of complex ethical issues in relationships in the workplace, while finance specialists are conversant with routine compliance with regulations. Marketing professionals are under pressure to produce revenue results. Thus, this research hypothesized that human resources managers would be more disapproving of unethical conduct than both finance and marketing functional managers, and that finance managers would be more disapproving than marketing managers. When asked to evaluate (...)
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  • The Integrity of Financial Analysts: Evidence from Asymmetric Responses to Earnings Surprises.Rui Lu, Wenxuan Hou, Henry Oppenheimer & Ting Zhang - 2018 - Journal of Business Ethics 151 (3):761-783.
    This paper investigates the integrity of financial analysts by examining their recommendation responses to large quarterly earnings surprises. Although there is no significant difference in recommendation changes between affiliated and unaffiliated analysts in response to positive earnings surprises, affiliated analysts are more reluctant than unaffiliated analysts to downgrade stock recommendations in response to negative earnings surprises. The evidence implies that conflicts of interest undermine the integrity of financial analysts. We further examine the effects of reputation concern and the Global Research (...)
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  • Should Financial Gatekeepers be Publicly Traded?Haozhi Huang, Mingsheng Li & Jing Shi - 2020 - Journal of Business Ethics 164 (1):175-200.
    We investigate how a broker firm’s initial public offering affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first 2 to 3 years after their employers’ IPO than before the IPO. The increase in the recommendation bias is greater among analysts of affiliated brokers and brokers that raise additional capital after their IPO than among other analysts. Newly listed broker firms experience (...)
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  • Do brokers act in the best interests of their clients? New evidence from electronic trading systems.Annilee M. Game & Andros Gregoriou - 2014 - Business Ethics: A European Review 25 (2):187-197.
    Prior research suggests brokers do not always act in the best interests of clients, although morally obligated to do so. We empirically investigated this issue focusing on trades executed at best execution price, before and after the introduction of electronic limit-order trading, on the London Stock Exchange. As a result of limit-order trading, the proportion of trades executed at the best execution price for the customer significantly increased. We attribute this to a sustained increase in the liquidity of stocks as (...)
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  • Does the External Monitoring Effect of Financial Analysts Deter Corporate Fraud in China?Jiandong Chen, Douglas Cumming, Wenxuan Hou & Edward Lee - 2016 - Journal of Business Ethics 134 (4):727-742.
    We examine whether analyst coverage influences corporate fraud in China. The fraud triangle specifies three main factors, i.e. opportunity, incentive, and rationalization. On the one hand, analysts may reduce the fraud opportunity factor through external monitoring aimed at discouraging managerial misconduct, which can moderate agency problems. On the other hand, analysts may increase the fraud incentive factor by pressurizing managers to achieve short-term performance targets, which can exacerbate agency problem. In either case, the potential influence of analysts on the fraud (...)
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