This paper examines the relationship between analysts' decisions to follow firms and institutional investors' decisions to hold these firms. The authors argue that these decisions are interrelated through the customer/supplier relationship between institutions and brokers. Analysts often perform or are associated with brokerage activities, and their reports can influence institutional ownership. Conversely, institutional demand for information about firms can affect analysts' decisions on which firms to follow. The study uses a simultaneous equations model to analyze the determinants of analyst following and institutional ownership. It finds that analyst following increases in regulated and growing industries, and in relatively neglected firms and those with declining volatility. Institutional ownership increases with firm size and market risk. The paper also finds that changes in analyst following are positively associated with industry growth, regulation, and stock performance, and negatively associated with preexisting analyst following. Changes in institutional ownership are positively associated with stock performance, changes in shares outstanding, and lagged analyst and institutional ownership. The authors address the issue of simultaneity, where analysts' and institutions' behaviors are jointly determined by firm and industry characteristics. They use a two-stage least squares (2SLS) approach to estimate the model, finding that the results are robust across different time periods. The study concludes that while institutions are likely to add growing firms to their portfolios, there is no evidence that analysts move to cover growing firms. The findings suggest that analyst following and firm size are related, but there is no direct causal link between the two. The results also indicate that institutions may prefer firms with higher systematic risk, contrary to some a priori expectations. Overall, the study provides insights into the factors influencing firms' information environments and the decisions of analysts and institutional investors.This paper examines the relationship between analysts' decisions to follow firms and institutional investors' decisions to hold these firms. The authors argue that these decisions are interrelated through the customer/supplier relationship between institutions and brokers. Analysts often perform or are associated with brokerage activities, and their reports can influence institutional ownership. Conversely, institutional demand for information about firms can affect analysts' decisions on which firms to follow. The study uses a simultaneous equations model to analyze the determinants of analyst following and institutional ownership. It finds that analyst following increases in regulated and growing industries, and in relatively neglected firms and those with declining volatility. Institutional ownership increases with firm size and market risk. The paper also finds that changes in analyst following are positively associated with industry growth, regulation, and stock performance, and negatively associated with preexisting analyst following. Changes in institutional ownership are positively associated with stock performance, changes in shares outstanding, and lagged analyst and institutional ownership. The authors address the issue of simultaneity, where analysts' and institutions' behaviors are jointly determined by firm and industry characteristics. They use a two-stage least squares (2SLS) approach to estimate the model, finding that the results are robust across different time periods. The study concludes that while institutions are likely to add growing firms to their portfolios, there is no evidence that analysts move to cover growing firms. The findings suggest that analyst following and firm size are related, but there is no direct causal link between the two. The results also indicate that institutions may prefer firms with higher systematic risk, contrary to some a priori expectations. Overall, the study provides insights into the factors influencing firms' information environments and the decisions of analysts and institutional investors.