Does Time-Space Compression Affect Analysts’ Forecast Performance?

Chen, K., Guo, W., Jiang, L., Xiong, X., & Yang, M. (2022). Does time-space compression affect analyst forecast performance?. Research in International Business and Finance, 62, 101719.

21 Pages Posted: 5 May 2021 Last revised: 26 Aug 2022

See all articles by Kejing Chen

Kejing Chen

Dongbei University of Finance & Economics

Wenqi Guo

University of Leeds

Lin Jiang

Dongbei University of Finance and Economics

Xiong Xiong

College of Management and Economics and China Center for Social Computing and Analytics

Mo Yang

School of Finance, Dongbei University of Finance and Economics

Date Written: July 16, 2022

Abstract

Despite the increasing attention given to the time-space compression effect brought by improved
transportation, the economic consequences, especially those on analyst forecast performance,
have yet to be explored. Based on difference-in-difference model designs and a sample of China’s
stock markets, we find robust empirical evidence that high-speed railway connections have a
significantly positive effect on analyst forecast performance from various perspectives. We further
conduct counterfactual analyses to examine the underlying mechanism and analyse the influence
of high-speed railway connections on analysts’ stock recommendations. This study contributes to
the influencing factors for sell-side analyst performance and the effect of geographic proximity on
information efficiency.

Keywords: High-speed railway connections; Analyst forecast performance; Site visits; Information asymmetry; Stock recommendation

JEL Classification: D8, G11, G14, G24, R42

Suggested Citation

Chen, Kejing and Guo, Wenqi and Jiang, Lin and Xiong, Xiong and Yang, Mo, Does Time-Space Compression Affect Analysts’ Forecast Performance? (July 16, 2022). Chen, K., Guo, W., Jiang, L., Xiong, X., & Yang, M. (2022). Does time-space compression affect analyst forecast performance?. Research in International Business and Finance, 62, 101719., Available at SSRN: https://ssrn.com/abstract=3839578 or http://dx.doi.org/10.2139/ssrn.3839578

Kejing Chen (Contact Author)

Dongbei University of Finance & Economics ( email )

Dalian
China

Wenqi Guo

University of Leeds ( email )

Leeds, LS2 9JT
United Kingdom

Lin Jiang

Dongbei University of Finance and Economics ( email )

China

Xiong Xiong

College of Management and Economics and China Center for Social Computing and Analytics ( email )

92, Weijin Road
Nankai District
Tianjin, Tianjin 300072
China

Mo Yang

School of Finance, Dongbei University of Finance and Economics ( email )

China

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