The Effect of a Change in Analyst Composition on Analyst Forecast Accuracy
Author | : John Nowland |
Publisher | : |
Total Pages | : |
Release | : 2010 |
ISBN-10 | : OCLC:1290801690 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book The Effect of a Change in Analyst Composition on Analyst Forecast Accuracy written by John Nowland and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior research has shown improvements in analysts' forecast accuracy around various events (e.g. new disclosure regulations or cross-listings), but these studies do not consider a change in the composition and ability of analysts providing forecasts over time. By studying foreign firms cross-listing on U.S. stock exchanges, we find that analyst composition changes by over 50 percent during the three-year period around cross-listing. We show that cross-listing is associated with a shift away from analysts who are less accurate forecasters and toward analysts who are more accurate forecasters. This shift in analyst composition accounts for a significant improvement of 9.5 percent in analyst forecast accuracy. In addition, we document that changes in both analyst ability and public information disclosure affect analyst forecast accuracy around cross-listing. Our results indicate that researchers should control for changes in analyst composition and ability when measuring the impact of specific events on analyst forecast accuracy.