Discussion of “What Determines Financial Analysts' Career Outcomes During Mergers?”

Wu and Zang [2009. What determines financial analysts' career outcomes during mergers? Journal of Accounting & Economics, forthcoming] examine how mergers and acquisitions in the investment banking/brokerage industry affect financial analyst employment. They find evidence of abnormally high analyst turnover following mergers that appears to reflect the acquirer's elimination of duplicate research capabilities and top analysts at the newly merged firm being hired away by competitors. Finally, they show that the increased analyst turnover at merged firms is related to decreases in analyst coverage and analyst performance post-merger.