Learning by doing or catering: Firm-specific experience and analyst forecast accuracy

Xu Ji, Shanhui Wu, Yan Dong and Xiaoqi Yang

Emerging Markets Review, 2024, vol. 60, issue C

Abstract: This article explores catering behavior among security analysts by examining how firm-specific experience impacts forecast accuracy. Using analyst forecasts on listed companies in China from 2014 to 2018, we find that firm-specific experience significantly reduces analyst forecast accuracy, which indicates the existence of catering behavior. Heterogeneity analysis reveals that catering behavior primarily exists for analysts employed by large brokerage firms or who issue forecasts for large companies. Further analysis shows that catering behavior is more prevalent when analysts make forecasts for SOEs. These findings suggest multi-faced implications of firm-specific experience and call for better regulations on refraining analysts' catering behavior.

Keywords: Catering; Learning by doing; Firm-specific experience; Analyst forecast accuracy; SOEs (search for similar items in EconPapers)
JEL-codes: G14 G24 J44 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:60:y:2024:i:c:s1566014124000281

DOI: 10.1016/j.ememar.2024.101133

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