The Effect of Media Competition on Analyst Forecast Properties: Cross-Country Evidence

54 Pages Posted: 8 Sep 2014 Last revised: 19 Mar 2015

See all articles by Ying Cao

Ying Cao

The Chinese University of Hong Kong (CUHK) - School of Accountancy

Sami Keskek

Florida State University

Linda A. Myers

University of Tennessee, Haslam College of Business, Accounting and Information Management

Albert Tsang

York University - Schulich School of Business

Date Written: August 1, 2014

Abstract

This study examines the effect of media competition on analyst forecast properties in an international setting. Using data from 113,436 firm-year observations from 32 countries spanning 2000 through 2012, we find that firms in countries with stronger media competition enjoy more accurate, less optimistically biased, and less dispersed analyst forecasts. In addition, we find that the effects of media competition on the properties of analyst forecasts are stronger for firms with lower institutional ownership, for firms followed by fewer analysts or by analysts from smaller brokerage houses, and for firms with weaker financial performance. This suggests that media competition plays a more pronounced role in shaping the information environment when information from non-media channels is likely to be limited or of lower quality. Finally, we find that analysts in countries with stronger media competition tend to follow more firms, suggesting that stronger media competition reduces analysts’ information acquisition costs, which in turn, improves the properties of their forecasts.

Keywords: media competition, international analyst forecasts, analyst forecast accuracy, analyst forecast optimism, analyst forecast dispersion, information environment

JEL Classification: M4, M41

Suggested Citation

Cao, Ying and Keskek, Sami and Myers, Linda A. and Tsang, Albert, The Effect of Media Competition on Analyst Forecast Properties: Cross-Country Evidence (August 1, 2014). Available at SSRN: https://ssrn.com/abstract=2492716 or http://dx.doi.org/10.2139/ssrn.2492716

Ying Cao

The Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

Shatin, N.T.
Hong Kong

Sami Keskek

Florida State University ( email )

Department of Accounting
College of Business
Tallahassee, FL 32306
United States

Linda A. Myers (Contact Author)

University of Tennessee, Haslam College of Business, Accounting and Information Management ( email )

Knoxville, TN
United States

Albert Tsang

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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