As Financial Week is reporting, a new study is about to be released that links positive stock ratings by Wall Street analysts to the number of “favors” received by such analysts from the execs of the companies that they cover.

The upcoming study was co-authored by professors James Westphal of the University of Michigan and Michael Clement of the University of Texas, Austin, and was based on a survey of several thousand analysts and hundreds of managers between 2000 and 2004.

According to the study, 63% of equity analysts reported receiving favors from CEOs, CFOs, and other senior executives of the companies that they covered. Favors included such things as recommending the analyst for another job and helping them gain access to a private club.

The problem with that? The study found a direct correlation between the amount of favors received by the analyst and his/her likelihood to upgrade or downgrade a stock based upon news and earnings.

Commentary: We are not surprised, are you? Whenever big money is involved, there are going to be conflicts of interest – and they will be difficult to root out. This study brings back memories of Jack Grubman, the Citibank analyst who upgraded his rating on AT&T stock in exchange for Citibank’s CEO (Sandy Weill) helping Grubman’s toddler get into preschool. Don’t believe us or remember that case? See for yourself in this litigation release from the SEC.