This paper models how the existence of analysts affects the manager’s optimal signaling strategy, and what the analyst’s optimal recommendation is when the analyst’s payoff depends on the trading commission his recommendation generates and the cost for being inaccurate. The results suggest that the manager’s signaling strategy depends on the market belief of firm performance. He sends truthful (uninformative) signals when the firm performance is believed to be bad (good). The analysts do not reveal information when the manager sends uninformative signals. Taking the analysts’ reaction into account, the manager is more likely to send uninformative signals if analysts are present. Finally, we discuss possible explanations why analysts fail to reveal information to the market. Joint work with Ricardo Calcagno (VU).