60 Pages Posted: 14 Jun 2018 Last revised: 2 Oct 2018
Date Written: August 7, 2018
This paper examines the impact of teamwork on sell-side analyst forecasting performance. Using a hand-collected sample of over 50,000 analyst research reports, we find that analyst teams issue more than 70% of annual earnings forecasts. In contrast, most prior research implicitly assumes that forecasts are issued by individual analysts. We further document that analyst teams generate more accurate earnings forecasts than individual analysts and that the stock market reacts more strongly to forecast revisions issued by teams. Analyst teams also cover more firms, issue earnings forecasts more frequently, and issue less stale forecasts. Among analyst teams, we show that team size and team member ability are significantly associated with forecast accuracy. Moreover, using detailed analyst background information from LinkedIn, we find that forecast accuracy is positively associated with team diversity based on sell-side experience, educational background, and gender.
Keywords: Teamwork, Analysts, Earnings Forecasts, Diversity, LinkedIn, Sell-Side, Education, Gender
JEL Classification: D83, G11, G24, J24, M14, M41
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