Analyst Incentives and Stock Return Synchronicity: Evidence from MiFID II

Yihan Li, Xin Liu, Vesa Pursiainen

Research output: Contribution to journalArticlepeer-review


MiFID II affects sell-side analyst incentives in Europe, forcing analysts to justify the value they add. While the number of analysts decreases, the average stock return synchronicity with the market also decreases, implying an improvement in price informativeness. The decrease in synchronicity is larger for firms that are more important for the analysts and brokers covering them. It is also asymmetric and substantially larger for negative market movements. Our results suggest that, by changing incentives, MiFID II not only improves the quality of individual analyst work, but also achieves an improvement in the aggregate stock price informativeness.

Original languageEnglish
Pages (from-to)77-97
JournalFinancial Analysts Journal
Issue number4
Early online date17 Aug 2022
Publication statusPublished - 31 Dec 2022


  • MiFID II
  • price informativeness
  • sell-side analysts
  • stock return synchronicity

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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