Paid-for stock research has generally elicited widespread skepticism, but a new scholarly paper by three accounting professors suggests that paid-for analysts are more like auditors and credit-rating firms than is generally believed.

The study, which appears in the current issue of The Accounting Review, a journal of the American Accounting Association, analyzes a sample of 247 paid-for reports and concludes that “the recommendations and forecasts supplied by paid-for research firms provide value-relevant information for the buy-and-hold investor and [that] they affirm the SEC Advisory Committee recommendations supportive of paid-for research as a means of filling the void left by declining sell-side analyst coverage."

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