Sell-Side School Ties





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    • Cohen is at the Harvard Business School and NBER; Frazzini is at the University of Chicago Graduate School of Business and NBER; Malloy is at the Harvard Business School. We would like to thank Joseph Chen, Josh Coval, Eugene Fama, Cam Harvey (Editor), Owen Lamont, an anonymous referee, an associate editor, and seminar participants at the Harvard Business School, Stanford University, Northwestern University, Ohio State University, University of Chicago, University of Maryland, University of Florida, London Business School, London School of Economics, SIFR, Bentley College, Barclays Global Investors, the Society of Quantitative Analysts, and the AFA Meetings in Chicago for helpful comments. We also thank Nick Kennedy, Stephen Wilson, Laura Dutson, Matthew Healey, Meng Ning, Courtney Stone, and Bennett Surajat for excellent research assistance. In addition, we are grateful to BoardEx and Linda Cechova for providing firm board data, and to Devin Shanthikumar and Alexander Ljungqvist for sharing data with us. We gratefully acknowledge funding from the National Science Foundation.


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.