Do Professional Rankings Affect Analyst Behavior? Evidence from a Regression Discontinuity Design

1 Pages Posted: 2 Oct 2020 Last revised: 13 Jul 2021

See all articles by Michael J. Jung

Michael J. Jung

University of Delaware - Accounting & MIS

Yiqing Lü

New York University (NYU) - New York University (NYU), Shanghai

Hong Wu

Fudan University - School of Economics

Yuhai Xuan

University of California, Irvine - Paul Merage School of Business

Date Written: July 3, 2021

Abstract

We examine how winning an all-star award affects analyst behavior. Using a novel dataset on analyst rankings, we employ a regression discontinuity design that compares the research outputs of third-place all-star analysts and runner-up analysts who barely miss the distinction. We find that winning an award makes analysts more optimistic in their forecasts and recommendations and enables them to move the markets. Winning analysts obtain higher priority during earnings conference calls and have better career outcomes. Overall, our evidence is consistent with award-winning analysts leveraging increased reputation and the associated market influence to induce more trade commissions and career benefits.

Keywords: Sell-Side Analysts, Reputation, Stock Market Reaction, Professional Behavior, All-Star Award, Forecast Optimism, Forecast Boldness

JEL Classification: G23, G40, M41

Suggested Citation

Jung, Michael J. and Lü, Yiqing and Wu, Hong and Xuan, Yuhai, Do Professional Rankings Affect Analyst Behavior? Evidence from a Regression Discontinuity Design (July 3, 2021). Available at SSRN: https://ssrn.com/abstract=3677702 or http://dx.doi.org/10.2139/ssrn.3677702

Michael J. Jung

University of Delaware - Accounting & MIS ( email )

Alfred Lerner College of Business and Economics
Newark, DE 19716
United States

Yiqing Lü

New York University (NYU) - New York University (NYU), Shanghai ( email )

1555 Century Ave
Pudong
Shanghai, Shanghai 200122
China

HOME PAGE: http://www.yiqinglue.com/

Hong Wu (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Yuhai Xuan

University of California, Irvine - Paul Merage School of Business ( email )

4291 Pereira Drive
Irvine, CA California 92697-3125
United States

HOME PAGE: http://yuhai.merage.uci.edu/

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