SSRN-Sell Side School Ties by Andrea Frazzini, Christopher Malloy, Lauren Cohen

Score another one for REG FD. Frazzini, Malloy, and Cohen have a working paper out that looks at whether an analyst with school ties to company gets better information than one with no ties. Their finding? The ties seemed to matter in a pre-FD days, but not since.

SSRN-Sell Side School Ties by Andrea Frazzini, Christopher Malloy, Lauren Cohen:

"...find evidence that analysts outperform on their stock recommendations when they have an educational link to the company. A simple portfolio strategy of going long the buy recommendations with school ties and going short buy recommendations without ties earns returns of 5.40% per year. We test whether Regulation FD, targeted at impeding selective disclosure, constrained the use of direct access to senior management. We find a large effect: pre-Reg FD the return premium from school ties was 8.16% per year, while post-Reg FD the return premium is nearly zero and insignificant"

Cite: Frazzini, Andrea, Malloy, Christopher J. and Cohen, Lauren, "Sell Side School Ties" (February 20, 2008). Harvard Business School Finance Working Paper No. 08-074 Available at SSRN: http://ssrn.com/abstract=1095808