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
Citation
HARFORD, Jarrad; JIANG, Feng; Rong WANG; and XIE, Fei.
Analyst career concerns, effort allocation, and firms information environment. (2019). Review of Financial Studies. 32, (6), 2179-2224.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5960
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1093/rfs/hhy101