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RFS Advance Access published online on July 27, 2006
Review of Financial Studies, doi:10.1093/rfs/hhl028
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© The Author 2006. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Article

Analyst Behavior Following IPOs: The "Bubble Period" Evidence

Daniel J. Bradley 1 *, Bradford D. Jordan 2, and Jay R. Ritter 3
1 320C Sirrine Hall Clemson University Clemson, SC 29634 (864) 656-6545
2 Gatton College of Business and Economics University of Kentucky Lexington, KY 40506-0034 (859) 257-4887
3 Warrington College of Business University of Florida Gainesville, FL 32611-7168 (352) 846-2837

* To whom correspondence should be addressed.
Daniel J. Bradley, E-mail: dbradle{at}clemson.edu


  Abstract

We examine over 7,400 analyst recommendations made in the year after going public for IPOs from 1999-2000. Initiations of coverage at the end of the quiet period come almost exclusively from affiliated analysts, while initiations afterwards are predominantly from unaffiliated analysts. Contrary to previous findings, we find no evidence that the market discounts recommendations from affiliated analysts once we control for recommendation characteristics and timing. Moreover, analyst coverage in the first year is not affected by underpricing and, after the flurry of initiations at the end of the quiet period, the number of analysts covering a firm during the following eleven months is unrelated to the number of managing underwriters.


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