Abstract

http://ssrn.com/abstract=2225722
 


 



Cultural Proximity and the Processing of Financial Information


Qianqian Du


Hong Kong Polytechnic University

Frank Yu


China Europe International Business School

Xiaoyun Yu


Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

July 15, 2016

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
This paper examines how culture affects information asymmetry in financial markets. We extract firms traded in the U.S. but headquartered in regions sharing Chinese culture (“Chinese firms”), and manually identify a group of U.S. analysts of Chinese ethnic origin (“Chinese analysts”). We find that Chinese analysts issue more accurate forecasts on Chinese firms than non-Chinese analysts. The effect is stronger among firms with less transparent information environments. Further evidence suggests that cultural proximity can go beyond language commonality and analysts’ pre-existing channels for information. Market reaction is stronger when Chinese analysts issue favorable forecast revisions or upgrades about Chinese firms.

Number of Pages in PDF File: 43

Keywords: Culture, Forecast Accuracy, Information Asymmetry, Demographic Economics, Financial Analysts

JEL Classification: G14; G24; F65; J15; J24


Open PDF in Browser Download This Paper

Date posted: February 28, 2013 ; Last revised: September 1, 2016

Suggested Citation

Du, Qianqian and Yu, Frank and Yu, Xiaoyun, Cultural Proximity and the Processing of Financial Information (July 15, 2016). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=2225722 or http://dx.doi.org/10.2139/ssrn.2225722

Contact Information

Qianqian Du
Hong Kong Polytechnic University ( email )
9/F, Li Ka Shing Tower
The Hong Kong Polytechnic University
Hong Kong, Hung Hom, Kowloon M923
China
Fang Yu
China Europe International Business School ( email )
Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China
Xiaoyun Yu (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

Feedback to SSRN


Paper statistics
Abstract Views: 1,833
Downloads: 314
Download Rank: 71,465

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.250 seconds