Tournaments of Financial Analysts

48 Pages Posted: 2 Mar 2013

See all articles by Huifang Yin

Huifang Yin

Shanghai University of Finance and Economics

Huai Zhang

Nanyang Technological University (NTU)


We argue that financial analysts can be viewed as participants of two tournaments (the “All-star” tournament and the intrafirm tournament) and examine whether analysts are incentivized by the tournament compensation structure. Using data from 1991 to 2007, we find that interim losers are more likely to increase the boldness of their forecasts in the remainder of the tournament period than interim winners. This finding survives several robustness checks and is more pronounced when the interim assessment date is closer to the end of the tournament period, when analysts are inexperienced, and when the market activity is high. In addition, we show that interim losers’ changes in boldness are less informative than interim winners’. Collectively, our findings suggest that viewing financial analysts as participants of tournaments provides a useful framework for understanding analysts’ behavior.

Keywords: tournament theory, boldness, financial analysts

JEL Classification: G20, G17, G24, M40, M41

Suggested Citation

Yin, Huifang and Zhang, Huai, Tournaments of Financial Analysts. Review of Accounting Studies, Forthcoming, Available at SSRN:

Huifang Yin

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433

Huai Zhang (Contact Author)

Nanyang Technological University (NTU) ( email )

Nanyang Business School
50 Nanyang Ave.
Singapore, 639798
+65-6790-4097 (Phone)

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