Seeing is Believing: Analysts’ Corporate Site Visits

57 Pages Posted: 13 Feb 2014 Last revised: 21 Dec 2016

Qiang Cheng

Singapore Management University

Fei Du

The University of Hong Kong

Xin Wang

The University of Hong Kong

Yutao Wang

Central University of Finance and Economics (CUFE)

Date Written: June 2016

Abstract

This study examines the impact of corporate site visits on analysts’ forecast accuracy based on a sample of such visits to Chinese listed firms during 2009–2012. We find that analysts who conduct visits (“visiting analysts”) have a greater increase in forecast accuracy than other analysts. Consistent with the notion that site visits facilitate analysts’ information acquisition through observing firms’ operations, we find that the results are stronger for manufacturing firms, firms with more tangible assets, and firms with more concentrated business lines. Moreover, we find that the effect of a site visit is greater when the site visit is an analyst-only visit, when the current visit is preceded by fewer visits, and when visiting analysts are based far from the visited firms. Furthermore, we find that site visits partially mitigate non-local analysts’ information disadvantage. Collectively, these results indicate that site visits are an important information acquisition activity for analysts.

Keywords: Site visits, analyst forecasts, information acquisition activities, local advantage

JEL Classification: M41

Suggested Citation

Cheng, Qiang and Du, Fei and Wang, Xin and Wang, Yutao, Seeing is Believing: Analysts’ Corporate Site Visits (June 2016). Singapore Management University School of Accountancy Research Paper No. 2015-31; Review of Accounting Studies, Vol. 21, No. 4, 2016. Available at SSRN: https://ssrn.com/abstract=2395093 or http://dx.doi.org/10.2139/ssrn.2395093

Qiang Cheng (Contact Author)

Singapore Management University ( email )

60 Stamford Road
Singapore, 178900
Singapore

Fei Du

The University of Hong Kong ( email )

School of Business
Pokfulam Road
Hong Kong
Hong Kong

Xin Wang

The University of Hong Kong ( email )

1215 K.K.Leung Building
Hong Kong
Hong Kong

Yutao Wang

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Beijing, 100081
China

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