Security Analyst Networks, Performance and Career Outcomes

37 Pages Posted: 12 Dec 2009

See all articles by Joanne Horton

Joanne Horton

University of Warwick - Warwick Business School

George Serafeim

Harvard Business School

Date Written: December 11, 2009

Abstract

Using a sample of 42,376 board directors and 10,508 security analysts we construct a social network, mapping the connections between analysts and directors, between directors, and between analysts. We use social capital theory and techniques developed in social network analysis to measure the analyst’s level of connectedness and investigate whether these connections provide any information advantage to the analyst. We find that better-connected (better-networked) analysts make more accurate, timely, and bold forecasts. Moreover, analysts with better network positions are less likely to lose their job, suggesting that these analysts are more valuable to their brokerage houses. We do not find evidence that analyst innate forecasting ability predicts an analyst’s future network position. In contrast, past forecast optimism has a positive association with building a better network of connections.

Keywords: security analysts, social networks, forecast accuracy, forecast boldness, career outcome

JEL Classification: D82, G14, G18, G24, J24 M41

Suggested Citation

Horton, Joanne and Serafeim, George, Security Analyst Networks, Performance and Career Outcomes (December 11, 2009). Available at SSRN: https://ssrn.com/abstract=1522313 or http://dx.doi.org/10.2139/ssrn.1522313

Joanne Horton

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

George Serafeim (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=15705

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