Equity Research as Marketing Tool: The Case of Secondary Market Equity Trading

41 Pages Posted: 8 Nov 2004

See all articles by Steven Strauss

Steven Strauss

Princeton University - Princeton School of Public and International Affairs

Ning Zhu

China Academy of Financial Research (CAFR); Yale School of Management; University of California, Davis - Graduate School of Management

Date Written: June 2004

Abstract

We examine the role of sell-side financial analysts in generating commission revenues. Using a data set from 1997-2002 for America, Europe and Japan, we find that both the quality and quantity of equity research contribute to sell-side firm revenues. The perceived quality of investment bank equity research (the sell-side) drives market share in sales trading, but not in investment banking. By contrast, the volume of equity research, measured by number of analysts (or the number of companies covered or the number of reports published), is positively correlated with both trading and investment banking market share. This supports the hypothesis that equity research analysts are effective marketing and revenue-generating tools for sell-side firms.

Keywords: Financial analyst, equity trading, financial intermediation

JEL Classification: G2, G18, G24

Suggested Citation

Strauss, Steven and Zhu, Ning, Equity Research as Marketing Tool: The Case of Secondary Market Equity Trading (June 2004). Available at SSRN: https://ssrn.com/abstract=607363 or http://dx.doi.org/10.2139/ssrn.607363

Steven Strauss

Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Ning Zhu (Contact Author)

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Yale School of Management ( email )

135 Prospect Street
Box 208200
New Haven, CT 06520-8200
United States

HOME PAGE: http://pantheon.yale.edu/~nz26/

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-3871 (Phone)
530-752-2924 (Fax)

HOME PAGE: http://www.gsm.ucdavis.edu/Faculty/Zhu/

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