Analyst Geographic Proximity to Industry Center, Industry Information, and the Efficacy of Analyst Research Output
62 Pages Posted: 21 Jun 2018
Date Written: June 3, 2018
We propose that an analyst’s distance-to-industry-center (DTIC) can serve as an instrument for industry information. Consistent with this hypothesis, we find that DTIC has a significant negative impact on forecast accuracy. We conduct a series of tests to corroborate the link between DTIC and industry information, which is relevant for within-industry co-movement of firm fundamentals and returns. Finally, we exploit the impact of Chinese import shocks on different industries as exogenous shocks to industry centers to establish a causal link between DTIC and forecast accuracy. Overall, we shed light on how an analyst’s industry information is disseminated into the market.
Keywords: Analysts, Forecast Accuracy, Distance to Industry Center, Information Production
JEL Classification: G12, G14, G20, G24
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