Peer Effects Across Firms: Evidence from Security Analysts

35 Pages Posted: 2 May 2017 Last revised: 22 Nov 2017

See all articles by Jacelly Cespedes

Jacelly Cespedes

University of Minnesota - Carlson School of Management

Carlos Parra

Instituto Tecnológico Autónomo de México (ITAM)

Date Written: May 2017

Abstract

We assess the magnitude and mechanisms of workers’ productivity spillovers by estimating the peer effects among those working in the same occupation across firms using the setting of security analysts. The empirical design exploits one feature of social networks: the existence of partially overlapping peer groups. This refers to analysts who cover similar industries but not exactly the same group of industries, which generates peers of peers (excluded peers). This allows the identification of both peer characteristics and peer outcome effects. In addition, to deal with common group shocks, the exogenous characteristics of excluded peers are used as instruments. We find strong evidence of spillovers in terms of peer outcomes and characteristics. In particular, peer accuracy is positively related to analyst accuracy, while the number of industries followed by analysts' peers negatively impacts accuracy. In terms of the potential mechanisms that account for the spillover effects, we find that the effects are stronger when analysts see their peers performing well and that besides imitation, knowledge spillovers also help explain the results.

Keywords: peer effects, labor productivity, networks, social multiplier

JEL Classification: J24, D83, G24, M52

Suggested Citation

Cespedes, Jacelly and Parra, Carlos, Peer Effects Across Firms: Evidence from Security Analysts (May 2017). Available at SSRN: https://ssrn.com/abstract=2961561 or http://dx.doi.org/10.2139/ssrn.2961561

Jacelly Cespedes

University of Minnesota - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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

Carlos Parra (Contact Author)

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Sta. Teresa 930
Col. Héroes de Padierna
Mexico City, D.F. 01000, MEXICO 01080
Mexico

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

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