Open Access Journal Article

Informed Trading of Sell-Side Analysts: Evidence from Class Action Lawsuits

by Hyoseok David Hwang a,* orcid
Department of Accounting and Finance, University of Wisconsin - Eau Claire, USA
Author to whom correspondence should be addressed.
JEA  2024, 67; 3(3), 67;
Received: 18 August 2023 / Accepted: 2 September 2023 / Published Online: 15 September 2024


This paper examines whether sell-side analyst-affiliated investors trade stocks before their analysts release material information. Using class action lawsuits, I explore the pre-lawsuit periods and investigate how potentially informed analysts trade their covered firms. The event study finds that analyst-affiliated investors reduce their stockholdings of firms prior to their own analyst downgrades. The findings are more pronounced among investors employed by investment banks. The post-trading performance of analyst-affiliated investors suggests that they have superior information and front-run to maximize benefits.

Copyright: © 2024 by Hwang. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Hwang, H. D. Informed Trading of Sell-Side Analysts: Evidence from Class Action Lawsuits. Journal of Economic Analysis, 2024, 3, 67.
AMA Style
Hwang H D. Informed Trading of Sell-Side Analysts: Evidence from Class Action Lawsuits. Journal of Economic Analysis; 2024, 3(3):67.
Chicago/Turabian Style
Hwang, Hyoseok D. 2024. "Informed Trading of Sell-Side Analysts: Evidence from Class Action Lawsuits" Journal of Economic Analysis 3, no.3:67.
APA style
Hwang, H. D. (2024). Informed Trading of Sell-Side Analysts: Evidence from Class Action Lawsuits. Journal of Economic Analysis, 3(3), 67.

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