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Thesis Defense
Essays on Financial Analysts

Mahn Hiep Nguyen - PhD candidate in the PhD programme ESCP

Mahn Hiep Nguyen, PhD candidate in the PhD programme ESCP, will publicly defend his PhD thesis in Management Sciences.

10 July 2020 – 10:00 a.m. (CEST)
ESCP Business School Campus République

Attend the Defense


Financial analysts play an important role in capital markets. Through the issuance of analysis reports, they facilitate the incorporation of costly private information into security prices, supporting the informational efficiency of financial markets.

Thus, understanding their behavior has important implications for firms, investors, and policy makers. Despite decades of work, there are still many open questions regarding how financial analysts produce and how these reports are influenced by their working environment.

In this dissertation, we attempt at contributing to the literature of analyst behavior and its effects on the capital market by addressing several new research questions. The first two papers of this thesis try to better understand the incentives behind the well-known analyst bias and identify new soucres of bias. The third paper extends into an analysis of corporate governance and the role of financial analysts in alleviating information asymmetry.

The first paper compares analysts affiliated with debt underwriters to analysts affiliated with equity underwriters. We focus on the differences in target prices and recommendations and demonstrate that while equity underwriter analysts are significantly more optimistic in their target prices and recommendations, analysts affiliated with debt underwriters do not exhibit the same bias. While the prominent view in the literature is that equity underwriter analysts are more optimistic to nurture business relationships with the followed firms, the finding that analysts affiliated with debt underwriters behave differently is not consistent with this hypothesis and sheds new light on the different conflicts of interest that influence stock analysts' reporting behavior.

In the second paper, we show that analysts whose employers own a stake in the followed firms issue significantly more optimistic target prices and recommendations. Their recommendation upgrades underperform those of their peers by 0.8% in a two-month window. The difference in optimism between owner and non-owner analysts are even larger in the times of market downturn. These results highlight the conflicts of interest inherent in the analysts whose employers own the followed firms’ stocks.

The third paper looks more closely at the quality of corporate governance and the mediating effect of analyst coverage. We show that excessive compensation of outside directors is associated with bad-news hoarding and stock price crash risk. This relationship is largely attributed to excessive stock-based compensation, but not cash compensation. These findings cast doubts on the effectiveness of stock-based compensation in aligning the incentives of directors with shareholders' interest. In addition, we find that firms followed by more analysts have lower risk of stock price crashes associated with bad-news hoarding.;



  • Mr Michael Troege,
    Professor, ESCP Business School


  • Mrs Édith Ginglinger,
    Professor, Université Paris Dauphine - PSL
  • Mrs Anne-Gaël Vaubourg,
    Professor, Université de Poitiers


  • Mrs Alberta Di Giuli,
    Professor, ESCP Business School
  • Mr Joël Metais,
    Professor Emeritus, Université Paris Dauphine - PSL