Abstract
We study the resolution of conflicts of interest that arise when actors in professional firms represent separate parties with competing interests, using models of power and reputation to predict the resolution of such conflicts. We tested models on an initial sample of over 8,000 security analysts' ratings of corporate equity securities. Results show that analysts rate their clients' securities more favorably than other analysts rating the same securities. This positive bias is moderated by the reputation of the analyst and his or her department. Implications and extensions for organizational theory, multiservice professional firms, and security market regulation are discussed.
| Original language | English |
|---|---|
| Pages (from-to) | 1-22 |
| Number of pages | 22 |
| Journal | Administrative Science Quarterly |
| Volume | 43 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Jan 1998 |
Cite this
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Power and conflicts of interest in professional firms : Evidence from investment banking. / Hayward, Mathew L.A.; Boeker, Warren.
In: Administrative Science Quarterly, Vol. 43, No. 1, 01.01.1998, p. 1-22.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Power and conflicts of interest in professional firms
T2 - Evidence from investment banking
AU - Hayward, Mathew L.A.
AU - Boeker, Warren
PY - 1998/1/1
Y1 - 1998/1/1
N2 - We study the resolution of conflicts of interest that arise when actors in professional firms represent separate parties with competing interests, using models of power and reputation to predict the resolution of such conflicts. We tested models on an initial sample of over 8,000 security analysts' ratings of corporate equity securities. Results show that analysts rate their clients' securities more favorably than other analysts rating the same securities. This positive bias is moderated by the reputation of the analyst and his or her department. Implications and extensions for organizational theory, multiservice professional firms, and security market regulation are discussed.
AB - We study the resolution of conflicts of interest that arise when actors in professional firms represent separate parties with competing interests, using models of power and reputation to predict the resolution of such conflicts. We tested models on an initial sample of over 8,000 security analysts' ratings of corporate equity securities. Results show that analysts rate their clients' securities more favorably than other analysts rating the same securities. This positive bias is moderated by the reputation of the analyst and his or her department. Implications and extensions for organizational theory, multiservice professional firms, and security market regulation are discussed.
UR - http://www.scopus.com/inward/record.url?scp=0032220356&partnerID=8YFLogxK
U2 - 10.2307/2393589
DO - 10.2307/2393589
M3 - Article
VL - 43
SP - 1
EP - 22
JO - Administrative Science Quarterly
JF - Administrative Science Quarterly
SN - 0001-8392
IS - 1
ER -