Debt Analysts' Views of Debt-Equity Conflicts of Interest

TABLE 9
Alternative measure of the tone of debt analysts’ conflict discussions
This table presents results for two alternative measures of our main variable, the tone of debt analysts’ negative
conflict discussions. The alternative measures are based on the disagreement in the tone of conflict discussions
between debt and equity analyst reports. We extract equity analysts’ discussions of conflict events from a matched
sample of equity analysts’ reports and measure the discussions’ tone using the Naïve-Bayesian model. Our
alternative hybrid measure of debt analysts’ conflict discussions focuses on debt analysts’ reports that contain
negative conflict discussions when equity analysts’ conflict discussions are positive. Alternative Measure #1 uses
the training data set from debt analysts’ reports (used in our main analysis) to estimate the equity analysts’ Naïve-
Bayesian model. Alternative Measure #2 uses a new training data set based directly on equity analysts’ conflict
discussions. The first column repeats the respective main result from Tables 5 to 8 as a benchmark for comparison.
The next two columns present the results using identical tests but with one of the two alternative measures: only the
coefficient and t-statistic (or z-statistic) of the main variable are tabulated. All specifications are estimated with the
same set of other independent variables as the previously tabulated tests, but the results for these variables are not
tabulated. ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively, using two-tailed tests. All
variables are defined in Appendix 1.
Main Measure Alternative Alternative
(For Comparison) Measure #1 Measure #2
Variable Prediction (1) (2) (3)
From Table 5, Column (1), Dep. Var. = Debt Recommendation
Conflict Discuss Neg – -0.295*** -0.174** -0.254***
[-6.57] [-2.60] [-4.09]
From Table 6, Column (2), Dep. Var. = ΔCDS Spread
Conflict Discuss Neg × Equity Return + 2.729** 4.365*** 2.806
[2.11] [3.05] [1.51]
From Table 7, Column (1), Dep. Var. = Bond Volume
Conflict Discuss Neg + 0.220*** 0.111** 0.156***
[5.93] [2.29] [3.94]
From Table 8, Column (1), Dep. Var. = Bond Offering Yield
Conflict Discuss Neg Prior 6M + 0.270** 0.472** 0.391**
[2.02] [1.99] [2.79]
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