Karmaziene, E. (2023). The greater the volume, the greater the analyst Finance Research Letters, 51:1--6.
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Affiliated author
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Publication year2023
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JournalFinance Research Letters
Are sell-side security analysts paid for turnover-generating research? Using hand-collected annual income data from tax records in Sweden for the 1997-2007-year period, I show that analysts{\textquoteright} compensations increase in the trading turnover that their recommendations generate. Analysts are paid 0.002 % of broker-trading volume, or approximately 1 % of broker's commission revenues. The findings empirically validate the previously assumed turnover-compensation link and estimate its magnitude. The results may have policy implications related to the Markets in Financial Instruments Directive.