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

53 Pages Posted: 2 Apr 2011 Last revised: 14 May 2014

See all articles by Lynn L. Rees

Lynn L. Rees

Utah State University - Huntsman School of Business

Nathan Y. Sharp

Texas A&M University - Department of Accounting

Brady J. Twedt

University of Oregon - Lundquist College of Business

Date Written: May 2013

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 sample of business press articles that quote a financial analyst, we compare each cited analyst with the other analysts who were actively following the same 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 prior research has found to be positively associated with analyst quality, and that higher quality analysts are allotted more space in the articles. However, we cannot rule out the possibility that at least some of our analyst quality measures capture the effects of familiarity. After controlling for analyst quality and article tone, we find that analysts with unfavorable stock recommendations are more likely to be cited than analysts with favorable recommendations. We provide evidence of significant 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.

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

JEL Classification: G10, G24, J30, M41

Suggested Citation

Rees, Lynn L. and Sharp, Nathan Y. and Twedt, Brady J., Who’s Heard on the Street? Determinants and Consequences of Financial Analyst Coverage in the Business Press (May 2013). Mays Business School Research Paper No. 2012-30. Available at SSRN: https://ssrn.com/abstract=1800822 or http://dx.doi.org/10.2139/ssrn.1800822

Lynn L. Rees (Contact Author)

Utah State University - Huntsman School of Business ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States
435-797-2272 (Phone)

Nathan Y. Sharp

Texas A&M University - Department of Accounting ( email )

4353 TAMU
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

Brady J. Twedt

University of Oregon - Lundquist College of Business ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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