Publication Type

Working Paper

Version

publishedVersion

Publication Date

1-2020

Abstract

This study shows that analyst research benefits from the sharing of information about economically connected industries among colleagues. Measuring the intensity of potential information sharing with the level of economic connection between an analyst’s industry and her colleagues’ industries, we find that it is positively correlated with an analyst’s earnings forecast accuracy, stock recommendation profitability, coverage breadth, and report frequency after controlling for other determinants including broker or analyst fixed effects. We also find that analysts are more likely to issue reports when highly connected colleagues produce information. We show that sharing information with colleagues covering downstream (upstream) industries benefits an analyst’s revenue (expense) forecasts, and that an analyst’s performance improves (deteriorates) after an economically connected colleague joins (departs) the brokerage firm. Cross-sectionally, information sharing benefits an analyst’s research more when her colleagues have higher research quality, and when she and her colleagues have stronger social ties. Finally, we find that investors recognize the benefits of information sharing: they react more strongly to research reports issued by analysts whose covered industries have a higher level of economic connection to those of colleagues, and are more likely to vote such analysts as All-Stars.

Keywords

financial analyst, information sharing, economically connected industries, forecast accuracy, recommendation profitability, social network, All-Star ranking

Discipline

Accounting | Finance and Financial Management | Management Information Systems

Research Areas

Corporate Reporting and Disclosure

First Page

1

Last Page

64

Identifier

10.2139/ssrn.3502820

Publisher

SSRN

Copyright Owner and License

Authors

Comments

Published Journal of Accounting and Economics (2022) DOI: https://doi.org/10.1016/j.jacceco.2022.101496

Additional URL

https://doi.org/10.2139/ssrn.3502820

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