Information transfers from peer firms’ analyst revisions

Li Chen, Philip Shane, Xiaohua (Stephen) Wu and Yuyu Zhang

Meditari Accountancy Research, 2025, vol. 33, issue 3, 791-822

Abstract: PurposeThis study aims to examine whether analyst revisions on peer firms have information transfer effects on focal firms in the same industry, and whether firm-level rivalry and common analysts affect such information transfer.Design/methodology/approachThis study uses a large sample of US data on listed companies and financial analysts from 1996 to 2021. The authors use ordinary least squares and a short-window event study to test the formulated hypotheses.FindingsThe findings show that, on average, focal firm stock returns are positively associated with peer firms’ analyst revisions. However, information transfers from nonrival (rival) peer firms’ analyst revisions are positive (negative). Revisions by common analysts covering both peer and focal firms drive more positive transfers. Furthermore, peer firms’ revisions by common analysts, compared to noncommon analysts, trigger more reactions from focal firm analysts, consistent with investor reactions. Finally, common analyst coverage raises short-term return synchronicity around revisions.Originality/valueThis study adds to the information transfer literature by examining the information released by noncorporate entities (i.e. analyst revisions). It also extends our understanding of the roles of analysts, particularly the peer effect and common analysts, in the capital markets. Findings on analyst-driven return interdependencies among peers may interest investors in portfolio construction.

Keywords: Information transfer; Peer effect; Analyst revisions; Common analyst; Market reactions (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/medar/article/33/3/791/125 ... m-peer-firms-analyst (text/html)
https://www.emerald.com/medar/article-pdf/33/3/791 ... r-12-2024-2756en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:medarp:medar-12-2024-2756

DOI: 10.1108/MEDAR-12-2024-2756

Access Statistics for this article

Meditari Accountancy Research is currently edited by Prof Charl de Villiers and Warren Maroun

More articles in Meditari Accountancy Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().