Information Sharing and Spillovers: Evidence from Financial Analysts

Management Science, Forthcoming

31 Pages Posted: 14 Jul 2017 Last revised: 12 Oct 2017

See all articles by Byoung-Hyoun Hwang

Byoung-Hyoun Hwang

Cornell University - Dyson School of Applied Economics and Management; Korea University - Department of Finance

Jose Maria Liberti

Northwestern University - Kellogg School of Management; DePaul University

Jason Sturgess

Queen Mary University of London

Date Written: October 11, 2017

Abstract

We study how information sharing within an organization affects individual performance. We look at situations in which the same analyst, while working at the same broker, covers multiple mergers and acquisitions (M&As), in particular the acquirer prior to the M&A and the merged firm thereafter. We find that earnings forecasts for the merged firm are significantly more accurate when the analyst has a colleague (working at the same broker) covering the target prior to the M&A. This holds particularly true if acquirer- and target-analysts reside in the same locale, if they are part of a smaller team, and if the target-analyst is of higher quality. Our findings highlight the importance of information spillovers on individual performance in knowledge-based industries.

Keywords: Information Spillovers, Knowledge-based Industries, Analyst Performance

JEL Classification: G20, J23, J24, J31, J62, L23

Suggested Citation

Hwang, Byoung-Hyoun and Liberti, Jose Maria and Sturgess, Jason, Information Sharing and Spillovers: Evidence from Financial Analysts (October 11, 2017). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2998907 or http://dx.doi.org/10.2139/ssrn.2998907

Byoung-Hyoun Hwang (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

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

Korea University - Department of Finance

Seoul, 136-701
United States

Jose Maria Liberti

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Jacobs 4203
Evanston, IL 60208
United States
(847) 491-5861 (Phone)
(847) 491-5719 (Fax)

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/directory/liberti_jose.aspx

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
(312) 362-8739 (Phone)
(312) 362-6566 (Fax)

Jason Sturgess

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

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