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Brokerage firms' research is more optimistic than that of the major investment banks

Counterintuitively, I just read a Harvard study which found:

We find that analysts at firms with underwriting and trading businesses are actually less optimistic than those at pure brokerage houses, who perform no underwriting. The relatively less optimistic forecasts for underwriting firms are not fully explained by bank reputation. Nor is the relative optimism of brokerage firms explained by the types of clients they serve (retail or institutional). We conclude that sales and trading activities used to fund research create strong incentives for analyst optimism.

This finding nicely supports the business model of Nitron Advisors, which is not a broker/dealer, does not have an asset management business, and does not provide investment banking services.

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