58 Pages Posted: 6 Dec 2015 Last revised: 28 May 2017
Date Written: May 26, 2017
We use information from product descriptions in firm 10-Ks to analyze whether product market competition influences analysts’ decisions to cover firms, the accuracy and consistency of their earnings reports and their likelihood of obtaining Analyst All-Star status. We find that a firm’s analyst coverage and analyst forecast accuracy and consistency increase with product market competition and when firms are covered by analysts who also cover a larger fraction of the firm’s competitors. Analyst decisions to cover new firms or drop firms from their coverage are also related to whether the firms are competitors of the existing firms in their coverage portfolios. We also show that analysts whose portfolios comprise a larger fraction of firms that are competitors are more likely to obtain Analyst All-Star status.
Keywords: Competition, Analysts, All-Star, Stock Analysts
JEL Classification: G24, L16
Suggested Citation: Suggested Citation
Hsu, Charles and Li, Xi and Ma, Zhiming and Phillips, Gordon M., Does Product Market Competition Influence Analyst Coverage and Analyst Career Success? (May 26, 2017). Tuck School of Business Working Paper No. 2698331. Available at SSRN: https://ssrn.com/abstract=2698331