Research On The Conflict Of Interests Between The Analysts And Fund Managers

Securities analysts as a major capital market research, whose role is to provide investors with valuable recommendations and earnings forecast reports. However, analysts do not live in an independent professional environment, research reports are subject to the complex impact facing multiple conflicts of interest and pressure: Analysts working at the brokers want to get listed company’s underwriting business; Brokers except to get institutional investors trading commissions and warehouse income; Maintaining good personal relationship with the management of the listing corporations to obtain better quality information; The business performance of the securities investment of the securities firms. The pressure, which Analysts face, will lead to the release optimistic bias reports. At the same time, securities analysts also face pressure from the fund managers. Fund managers are the representative of the investors, relative to the seller analysts, fund managers belong to the buyers, representing the interests of investors. There are three types of conflicts of interest among analysts and fund managers: firstly, based on analysts and fund managers of the reputation and career earnings, analysts expect to be chosen as the star, the fund managers are egar to improve fund performance ranking, which bring their increasing in reputation and salaries; secondly, the behavior that brokers shares of fund company affects recommendations by analysts; thirdly, to get more commission from fund company,brokers will force analysts to issue unfair recommendations.In this paper, we use the Chinese open end Fund database, the listing Corporation’s financial indicators analysis database and the new wealth of the official website and other data to study the interests conflict between analysts and fund managers. Selecting the explanatory variables, explanatory variables and control variables to construct the models of conflict of interest between analysts and fund managers, data was processed by SAS software, then regression, and the results were obtained. The study found that:(1) there exist phenomenon between the analysts and fund managers in exchange of reputation; the more optimistic of analysts’ largest stock rating, the greater probability of star analysts. Star analysts tend to recommend the stocks by many funds shares in order to get more support. Using the samples of the star analysts and star fund managers, the recommendations from star analysts can improve the performance of the star fund.(2) Compared with the non affiliated analysts, affiliated analysts released more optimistic recommendation report in particular tend to recommend fund heavy warehouse stock. Rating level of optimism by affiliated analysts released has Positive correlation in proportion of shares, fund size, stock market value. The higher the proportion of the shares of the securities, the greater the size of the fund, the stock market value in the proportion of the investment portfolio, the more optimistic by the stock market of analysts.(3) According to securities analyst recommendation data, the author researched the reason of optimistic recommendations in brokers’ trade commission. The result show: the stocks in the portfolio market value increases analysts’ recommendation rating of optimism; in the process of the commission competition, the analyst’s optimism will increase brokerage commission income.The research of this paper is that the former scholars mostly focus on the research analyst or fund, which leads to building the models of ananlysts’ variables or funds’ variables. In this paper, we will establish the models of the relationship between the analyst and the fund. The models contain the analyst’s control variables, and also consider the fund’s variables. Also explained variables and explanatory variables of this paper is based on appraisal systems of star analyst and star fund to establish, also involves the fund heavy stocks. it is also a highlight of the model.In the end, the paper puts forward suggestions of the three kinds of conflicts of interest among the analysts and fund managers.