Abstract
We examine the role of sell-side financial analysts in generating commission revenues. Using a data set from 1997-2002 for America, Europe and Japan, we find that both the quality and quantity of equity research contribute to sell-side firm revenues. The perceived quality of investment bank equity research (the sell-side) drives market share in sales trading, but not in investment banking. By contrast, the volume of equity research, measured by number of analysts (or the number of companies covered or the number of reports published), is positively correlated with both trading and investment banking market share. This supports the hypothesis that equity research analysts are effective marketing and revenue-generating tools for sell-side firms.
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