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

Abstract

In this paper we document that the earnings forecasts of security analysts who share a first name with the CEO of a covered firm (referred to as ‘matched’ analysts) are more accurate, on average, than those of analysts who do not share a first name (referred to as ‘unmatched’ analysts). This result is consistent with findings in psychology which show that individuals have an affinity for those who share first names and suggests that the CEO is more likely to share private information with a matched analyst. We find this phenomenon to be concentrated among those matched analysts with less common first names, perhaps because the salience of sharing a first name is lower for analysts with more common names. It is also stronger in situations where there is greater information asymmetry between management and analysts.

Keywords: security analysts, earnings forecast accuracy, first names

JEL Classification: G14, G24, G40, M41