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All-star Analyst Turnover, Investment Bank Market Share, and the Performance of Initial Public Offerings

2003; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.350682

1556-5068

Jonathan Clarke, Craig G. Dunbar, Kathleen M. Kahle,

Auditing, Earnings Management, Governance

The impact of all-star analyst turnover on initial public offering market share and the performance of initial public offerings is examined. Overall, we find that neither "winners" nor "losers" in the battle for all-star analysts experience a significant change in market share. In order to offset the loss of a star analyst, investment banks become more aggressive by taking on more speculative deals. The banks gaining the all-stars also take on more speculative issuers. Although forecast accuracy increases following the arrival of a star, forecast optimism does not change, which suggests that analyst objectivity is not affected. Overall, the evidence is not consistent with the commonly held view that analysts have a significant impact on a bank's ability to attract IPO deal flow.