The Effects Of Analyst Characteristics And Regulation On Trade Generation For Brokerage Firms

This paper examines the stability and determinants of equity trading market share for U.S. brokerage firms over the period 1996 through 2004. Using brokerage house market share as a proxy for trade generation, they find significant annual variations in brokerage market share at the firm level. Analyst recommendation activity, the presence of an all-star analyst, and an investment banking affiliation with the firm are positively associated with brokerage market share. On average, gaining an investment banking client adds 2.3 percent (3.2 percent) to a top (non-top) brokerage firm's market share of trading in that stock.