Do Analysts Gain an Informational Advantage by Visiting Listed Companies?

43 Pages Posted: 21 Aug 2017

See all articles by Bing Han

Bing Han

University of Toronto, Rotman School of Management

Dongmin Kong

Department of Finance, Huazhong University of Science and Technology; School of Finance, Zhongnan University of Economics and Law

Shasha Liu

School of Management, Jinan University

Date Written: August 16, 2017

Abstract

We examine the improvements to forecast accuracy that result from analysts’ visits to listed companies. We find that company visits significantly enhance the accuracy of the analysts’ earnings forecasts for those companies. The benefit from company visits is more pronounced for companies that are more neglected or less accessible and for brokerages firms that face less pressure for optimistic forecasts from buy-side clients. Our results are robust and remain significant after controlling for endogeneity and selection bias. Overall, our findings show that private interactions with company management provide analysts with an informational advantage and suggest that company visits facilitate the mosaic approach to information acquisition.

Keywords: Analyst Visit, Forecast Accuracy, Informational Advantage; Geography

JEL Classification: G11; G12

Suggested Citation

Han, Bing and Kong, Dongmin and Liu, Shasha, Do Analysts Gain an Informational Advantage by Visiting Listed Companies? (August 16, 2017). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3020194

Bing Han

University of Toronto, Rotman School of Management ( email )

Toronto, Ontario M5S 3E6
Canada
4169460732 (Phone)

Dongmin Kong (Contact Author)

Department of Finance, Huazhong University of Science and Technology ( email )

Wuhan, Hubei 430074
China

School of Finance, Zhongnan University of Economics and Law ( email )

Wuhan, Hubei 430073
China

Shasha Liu

School of Management, Jinan University ( email )

No. 601, West Huangpu Road
Guangzhou, Guangdong 510632
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
307
Abstract Views
1,653
rank
109,524
PlumX Metrics