An Analyst by Any Other Surname: Surname Favorability and Market Reaction to Analyst Forecasts

Journal of Accounting and Economics (JAE), Forthcoming

74 Pages Posted: 27 Aug 2016 Last revised: 21 Feb 2019

See all articles by Jay Jung

Jay Jung

City, University of London - Cass Business School

Alok Kumar

University of Miami - School of Business Administration

Sonya S. Lim

DePaul University - Department of Finance

Choong-Yuel Yoo

KAIST College of Business

Date Written: February 9, 2019

Abstract

We find that forecast revisions by analysts with more favorable surnames elicit stronger market reactions. The effect is stronger among firms with lower institutional ownership and for analysts with non-American first names. Following the 9/11 terrorist attacks, and France and Germany’s opposition to the Iraq War, revisions by analysts with Middle Eastern and French or German surnames, respectively, generated weaker market reaction. Surname favorability is not associated with forecast quality, but it has complementary effects with forecast performance on analysts’ career outcomes. Surname favorability mitigates under-reaction to forecast revisions. These findings are distinct from the effects of ethnic, cultural proximity, or in-group bias.

Keywords: Equity analyst, surname favorability, earnings forecast, market reaction, motivated reasoning

JEL Classification: G14, G24, J15, J71

Suggested Citation

Jung, Jay Heon and Kumar, Alok and Lim, Sonya S. and Yoo, Choong-Yuel, An Analyst by Any Other Surname: Surname Favorability and Market Reaction to Analyst Forecasts (February 9, 2019). Journal of Accounting and Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2830506 or http://dx.doi.org/10.2139/ssrn.2830506

Jay Heon Jung (Contact Author)

City, University of London - Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

HOME PAGE: http://www.jayheonjung.com

Alok Kumar

University of Miami - School of Business Administration ( email )

514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://moya.bus.miami.edu/~akumar

Sonya S. Lim

DePaul University - Department of Finance ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States

HOME PAGE: http://sites.google.com/site/sonyalim/

Choong-Yuel Yoo

KAIST College of Business ( email )

85 Hoegiro, Dongdaemoon-gu
Seoul, 02455
Korea, Republic of (South Korea)

HOME PAGE: http://www.business.kaist.edu/faculty/cyoo

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