Information flow and analyst information production


This paper analyzes information flow between financial analysts and their clients. Using high-frequency trading data and a new measure of relationship, we provide evidence that analysts elite clients buy on average more than other investors in the 5-day period before positive analyst coverage initiations. We also analyze the effect of Regulation Fair Disclosure (RFD) and Global Research Analyst Settlement (GRAS) on the incentives for brokers to disseminate information. Information production by analysts is also studied.