Muma Insights

Volume V: Corporate Oversight

Volume V of Muma Insights by finance Professor Dan Bradley examines the role of financial analysts in corporate governance. Analysts are hired by investors to examine all aspects of a company to determine if that company is a good investment. It's a given that analysts with long histories in that particular industry are able to provide reports that are more inclusive, but do their connections and familiarities pose any conflicts of interest - conflicts that may taint their observations?

Bradley delves into the relationships among analysts, corporate CEOs and investors and has determined that for the most part, analysts do report accurately what they find, even if they have had prior involvement with individuals associated with the company they are examining. Analysts are an important component of investment strategy and corporate leadership, as a robust look at what a company does right and wrong, benefits not only the potential investors, but the company as well. Says Bradley: "Analysts are critical assets to corporations in that a good analyst can be a vocal critic of management policies, which can ultimately influence firm behavior."

Read the full white paper, available in PDF or view on Issuu.

About the Author

Daniel Bradley

Daniel Bradley is a professor in the Muma College of Business Finance Department and holds the Lykes Chair in Finance and Sustainability. A recipient of the college research award in 2013, Bradley teaches integrated business applications, a graduate investment analysis course and a PhD-level empirical finance course. His research focuses on corporate finance with a particular interest on securities issuance and analyst behavior. He has published in most of the journals in the field including the Journal of Finance, Review of Financial Studies, Journal of Financial Economics, Journal of Financial and Quantitative Analysis. He holds a PhD from the University of Kentucky. His research collaborators for the paper "Are All Analysts Created Equal? Industry Expertise and Monitoring Effectiveness of Financial Analysts," were finance professors Sinan Gokkaya of Ohio University, Xi Liu of Miami University in Ohio and Fei Xie with the University of Delaware.