Analyst Integrity

We empirically investigate the impact of financial analysts' integrity on their information outputs and career success. Using analysts' off‐the‐job behavior, specifically their legal records, to proxy for analyst integrity, we predict and find that weak‐integrity analysts engage more in opportunistic behaviors, including “speaking in two tongues” and earnings forecast walk‐down. These analysts obtain favorable management access and make more accurate earnings forecasts. Further analyses indicate that while the market as a whole does not distinguish weak‐integrity analysts from others, sophisticated investors discount their information outputs. Weak‐integrity analysts also experience less favorable career outcomes. Our results have important implications for investors, professional bodies, employers, and regulators.