Measuring the Career Concerns of Security Analysts: Job Separations, Stock Coverage Assignments and Brokerage House Status

Stanford Business School Working Paper

41 Pages Posted: 12 Sep 2000

See all articles by Jeffrey D. Kubik

Jeffrey D. Kubik

Syracuse University - Department of Economics

Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2000

Abstract

This paper examines the career concerns of security analysts using long histories of their earnings forecasts, job separations and stock coverage assignments. Our findings include the following. Relatively good (accurate) past forecast performance increases the probability that an analyst moves from a low status to a high status (large, prestigious) brokerage house, while relatively poor past forecast performance leads to movements down the brokerage house hierarchy. High status brokerage houses are more likely to discharge an analyst for poor past forecast performance than other houses. In addition, analysts with poor past forecast performances but who do not change employers are more likely to be removed from following stocks with large market capitalization or significant analyst following. This effect is also more pronounced for analysts who work for high status brokerage houses. These findings suggest that the labor market for security analysts provides important implicit incentives for analysts to produce good forecast track records.

JEL Classification: G29, M41

Suggested Citation

Kubik, Jeffrey D. and Hong, Harrison G., Measuring the Career Concerns of Security Analysts: Job Separations, Stock Coverage Assignments and Brokerage House Status (August 2000). Stanford Business School Working Paper. Available at SSRN: https://ssrn.com/abstract=238848 or http://dx.doi.org/10.2139/ssrn.238848

Jeffrey D. Kubik

Syracuse University - Department of Economics ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-9063 (Phone)
315-443-1081 (Fax)

Harrison G. Hong (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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