Publication Type

Journal Article

Version

submittedVersion

Publication Date

6-2019

Abstract

Analysts strategically allocate more effort to portfolio firms that are relatively more important to their careers. Thus, the other firms the analysts cover indirectly affect a firm’s information environment. Controlling for analyst and firm characteristics, we find that an analyst makes more accurate, frequent, and informative earnings forecasts and recommendations for firms ranked higher within her portfolio based on proxies for importance to institutions. A firm’s relative rank widely varies across analysts, but its information environment improves when a larger proportion of analysts consider it to be relatively important. Analysts experience more favorable career outcomes when strategically allocating their efforts.

Keywords

Sell-side analysts, Effort allocation, Limited attention, Career concerns, Earnings forecast, Stock recommendation, Firm information environment, Labor market outcomes

Discipline

Finance and Financial Management | Strategic Management Policy

Research Areas

Finance

Publication

Review of Financial Studies

Volume

32

Issue

6

First Page

2179

Last Page

2224

ISSN

0893-9454

Identifier

10.1093/rfs/hhy101

Publisher

Oxford University Press (OUP): Policy F - Oxford Open Option D

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1093/rfs/hhy101

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