Abstract Conflict of interest between brokerage and underwriting activities and security analysts’ research may result in optimistic bias in investment recommendations. This statement is tested in this paper based on the investment recommendations from July,2007 to June,2009. It is found that: in China,much more important brokerage activity is for security firms,more optimistic security analysts’ recommendations are,while underwriting pressure seems to have no significant effect on investment recommendations. Furthermore,much more stocks institutional investors hold,less optimistic investment recommendations are. Because security firms and their analysts’ reputation are usually evaluated by institutional investors,career concerns have the important role in moderating the optimistic bias.
2013, Vol. 1 
