Call Me by Your Name: The Effect of Analyst-CEO First Name Commonality on Analyst Forecast Accuracy

Abstract

We document that earnings forecasts of security analysts sharing a first name with the firm’s CEO (‘matched’ analysts) are more accurate than those of analysts who do not (‘unmatched’ analysts). This result is consistent with findings in psychology which show that individuals have an affinity for those who share first names, which can manifest itself in the CEO sharing private information with a matched analyst and/or in the matched analyst exerting more effort to forecast the firm’s earnings. We find this phenomenon to be concentrated among matched analysts with less common first names, perhaps because the salience of sharing a first name is lower for analysts with more common names. We also find that the observed forecasting superiority of matched analysts declines the longer the match has been in effect, suggesting that the benefit of sharing a first name diminishes as analysts gain more experience in forecasting a firm’s earnings.

Keywords: security analysts, earnings forecast accuracy, first names

JEL Classification: G14, G24, G40, M41