‘Did You Catch the Game Last Night?’ Peer Group Effects in Sell-Side Analyst Forecasts
62 Pages Posted: 12 Apr 2023
Date Written: March 23, 2023
In this paper, we identify a source of peer group influence that is plausibly orthogonal to information provision, yet nonetheless affects economic decision-making: the shock to an equity analyst of their undergraduate college football team winning the NCAA Championship Game. We find that analysts' forecasts respond positively to their undergraduate school's football team winning the NCAA final. We then show that the shock of 'winning' spreads within an analyst's brokerage, positively influencing the forecasts of their colleagues. Brokerages where the degree of this diffusion is greater have lower female representation in their analyst teams, as well as lower ESG scores.
Keywords: social networks, connections, sentiment, analyst forecasts
JEL Classification: G14, G24, G34, G41
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