Sell-Side School Ties

摘要

We study the impact of social networks on agents' ability to gather superior information about firms. Exploiting novel data on the educational background of sell-side analysts and senior corporate officers, we find that analysts outperform by up to 6.60% per year on their stock recommendations when they have an educational link to the company. Pre-Reg FD, this school-tie return premium is 9.36% per year, while post-Reg FD it is nearly zero. In contrast, in an environment that did not change selective disclosure regulation (the U.K.), the school-tie premium is large and significant over the entire sample period.