The effects of MiFID II on sell-side analysts, buy-side analysts, and firms
This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number o...
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sg-smu-ink.soa_research-29472022-01-27T03:57:15Z The effects of MiFID II on sell-side analysts, buy-side analysts, and firms FANG, Bingxu HOPE, Ole-Kristian HUANG, Zhongwei MOLDOVAN, Rucsandra This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more inhouse research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls, compared to the control group. We find some evidence that stock-market liquidity decreases post MiFID II. 2020-08-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1920 info:doi/10.1007/s11142-020-09545-w https://ink.library.smu.edu.sg/context/soa_research/article/2947/viewcontent/MiFID_2020_av.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University MiFID II Financial services Sell-side analysts Buy-side research Unbundling Hard dollar Europe Accounting Finance and Financial Management Portfolio and Security Analysis |
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MiFID II Financial services Sell-side analysts Buy-side research Unbundling Hard dollar Europe Accounting Finance and Financial Management Portfolio and Security Analysis |
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MiFID II Financial services Sell-side analysts Buy-side research Unbundling Hard dollar Europe Accounting Finance and Financial Management Portfolio and Security Analysis FANG, Bingxu HOPE, Ole-Kristian HUANG, Zhongwei MOLDOVAN, Rucsandra The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
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This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more inhouse research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls, compared to the control group. We find some evidence that stock-market liquidity decreases post MiFID II. |
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text |
author |
FANG, Bingxu HOPE, Ole-Kristian HUANG, Zhongwei MOLDOVAN, Rucsandra |
author_facet |
FANG, Bingxu HOPE, Ole-Kristian HUANG, Zhongwei MOLDOVAN, Rucsandra |
author_sort |
FANG, Bingxu |
title |
The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
title_short |
The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
title_full |
The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
title_fullStr |
The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
title_full_unstemmed |
The effects of MiFID II on sell-side analysts, buy-side analysts, and firms |
title_sort |
effects of mifid ii on sell-side analysts, buy-side analysts, and firms |
publisher |
Institutional Knowledge at Singapore Management University |
publishDate |
2020 |
url |
https://ink.library.smu.edu.sg/soa_research/1920 https://ink.library.smu.edu.sg/context/soa_research/article/2947/viewcontent/MiFID_2020_av.pdf |
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1770576024980946944 |