Who’s Heard on the Street? Determinants and Consequences of Financial Analyst Coverage in the Business Press

Abstract:     
This study examines the determinants of financial analyst coverage in the business press and the effects of such coverage on analysts’ careers. Using a unique database of business press articles that quote a financial analyst, we compare each cited analyst with the other analysts who were actively following the firm and could have been cited by the reporter, but were not. In general, we find that analysts quoted in the business press are more likely to possess characteristics that are positively associated with analyst quality relative to other analysts covering the same firms. This result suggests business press coverage can serve as a useful heuristic to help investors identify high-quality analysts. Moreover, after controlling for analyst quality and in a propensity-score matched sample, we find that analysts with unfavorable recommendations for the firms discussed in the business press are more likely to be cited than analysts with favorable recommendations. We also document significant future career benefits for analysts who receive publicity in the business press, which suggests that the business press is a source of valuable exposure for analysts.

Number of Pages in PDF File: 48

Keywords: Financial analysts, Business press, Analyst career outcomes, Capital markets

JEL Classification: G10, G24, J30, M41

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