Say What You See: Analyst Site Visits and Analyst Report Readability and Tone
28 Pages Posted: 23 Jul 2024
Abstract
With the growing market attention on the qualitative information quality of analyst reports, this study investigates the impact of analyst site visits on the two qualitative attributes of analyst reports: readability and tone. This study finds that higher analyst site visit frequencies improve the readability of analyst reports and reduce the net tone used in reports. In addition, the CARs around the release of analyst reports surge when these reports are more readable, indicating that market investors value reports with better qualitative quality. The heterogeneous tests further show that the positive impact of analyst site visits on analyst report readability/tone is more obvious for the firms with worse information environment, lower institutional ownership percentages, and less experienced analysts. Our main conclusions are robust in the PSM setting and 2SLS tests using the introduction of high-speed trains as the instrumental variable, as well as using the alternative proxies of analyst site visits and analyst report readability and tone.
Keywords: readability, tone, analyst site visit
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