Analyst Recommendations and Nasdaq Market Making Activity

Arbeitspapier

I investigate the linkage between liquidity provision by Nasdaq market makers and analysts in the same firm. Using three measures of market activity, I find that Nasdaq firms are more likely to provide buy side liquidity in anticipation of upgrades in the period 1999-2000. ECN activity supports this pattern. Firm level evidence shows that 15 of 42 market makers studied engage in significant pre-recommendation activity. I estimate cumulative abnormal returns of more than 75% and profits of almost $600 million in a sample of 47 large capitalization stocks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2003-07

Classification and Topics

• Classification: Wirtschaft ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Information and Market Efficiency; Event Studies; Insider Trading
• Subject: analyst ; Nasdaq ; market maker ; Betriebliche Liquidität ; Aktienmarkt ; Neuer Markt ; Vereinigte Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mizrach, Bruce
• Event: Veröffentlichung
• (who): Rutgers University, Department of Economics
• (where): New Brunswick, NJ
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/23165
• Last update: 10.03.2025, 11:42 AM CET