The Roles of Task-Specific Experience and Innate Ability in Understanding Analyst Performance

42 Pages Posted: 23 Jan 2006

See all articles by Michael B. Clement

Michael B. Clement

University of Texas at Austin - Department of Accounting

Lisa Koonce

University of Texas

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy

Date Written: January 16, 2006

Abstract

There is considerable debate in the literature about what analyst experience measures and whether analysts learn from their prior experiences. Extant research has argued that once an analyst's innate ability is considered, the general and firm-specific experiences of an analyst are not relevant to understanding his/her forecasting performance. This prior research posits that only the highest-ability analysts survive at the job and, as a result, performance is not a function of analysts learning from their experiences. Drawing on psychology-based research, we argue that previous measures of experience need to be expanded to not only include general and firm-specific experience, but also task-specific experience. We empirically test our ideas within the context of firms experiencing restructuring charges. Our results reveal that analysts' performance (i.e., forecast accuracy) around current restructurings is associated with both their innate ability and their task-specific restructuring experience. In addition, we find that forecast accuracy and task-specific experience are most highly correlated for those analysts who survive the longest and, thus, presumably have the greatest innate abilities.

Keywords: analysts, forecast accuracy, analyst characteristics, analyst learning

JEL Classification: G14, G24, G29, M41

Suggested Citation

Clement, Michael B. and Koonce, Lisa L. and Lopez, Thomas J., The Roles of Task-Specific Experience and Innate Ability in Understanding Analyst Performance (January 16, 2006). Available at SSRN: https://ssrn.com/abstract=876495 or http://dx.doi.org/10.2139/ssrn.876495

Michael B. Clement (Contact Author)

University of Texas at Austin - Department of Accounting ( email )

2110 Speedway, Stop B6400
Austin, TX 78712
United States
512-471-0332 (Phone)
512-471-3904 (Fax)

Lisa L. Koonce

University of Texas ( email )

Dept. of Accounting
McCombs School of Business
Austin, TX 78712
United States
512-471-5576 (Phone)
512-471-3904 (Fax)

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-2907 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
252
Abstract Views
2,230
rank
122,235
PlumX Metrics