The Speed of Information and the Sell-Side Research Industry

Daniel Bradley, Jonathan Clarke, and Linghang Zeng

Between 2009 and 2013, (FLY) leaks 58% of recommendation revisions with a median delay of 27 minutes relative to the I/B/E/S announcement time. We show FLY improves price discovery, but leaked recommendations hamper the ability of brokers to offer price improvement on trades routed through them. Three major brokers sued FLY and using key court dates, we show significant wealth and real effects to the brokerage industry. Overall, the speed with which analyst recommendations are disseminated has led to more rapid price discovery at the expense of a decline in the scope of the sell-side research industry.

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