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SELL-SIDE SECURITY ANALYSTS IN THE NEXUS OF PRINCIPAL-AGENT RELATIONS: AN INFORMATION ECONOMICS PERSPECTIVE

Andreas Höfer, Andreas Oehler

DOI: 10.22495/cocv10i2c2art6

Abstract

In this paper we investigate in depth the contractual partner relationships between sell-side security analysts and the correspondently involved parties, where the sell-side security analyst is considered as both principal and agent. We break the activities of security analysts down into a nexus of principal-agent relationships where the most striking contractual partner relationship in this network appears among sell-side analyst and the (to be) assessed company (evaluand). By analyzing the research question in this fashion we find considerable potential for information and moral hazard risks.

Keywords: Security Analysis, Principal-Agent Theory, Information Risk, Moral Hazard Risk, Financial Regulation

How to cite this paper: Höfer, A., & Oehler, A. (2013). Sell-side security analysts in the nexus of principal-agent relations: An information economics perspective. Corporate Ownership & Control, 10(2-2), 267-273. http://doi.org/10.22495/cocv10i2c2art6

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