The Influence of Buy-Side Analysts on Mutual Fund Trading

We present evidence of the impact of buy-side analysts on the behavior and performanceof fund managers. Using data provided by a large global asset manager,we relate buy-side analysts’ recommendations to fund transactions on a daily basis.Our results show that buy-side analysts have a significant influence on tradingdecisions: Fund managers almost certainly follow recent recommendation revisionsin their trades. Fund flows and sell-side recommendations matter as well, but toa lesser extent. Positive abnormal returns to buy-side analysts’ revisions are alsoreflected in the performance of mutual fund trades: trades triggered by buy-siderecommendations have higher returns than other trades.