The supply of analysts and earnings forecasts

Ying Wang, Zisen Liu and Xin Wang

International Review of Financial Analysis, 2022, vol. 84, issue C

Abstract: Using a unique set of hand-collected data, this study examines whether a larger supply of prospective analysts leads to existing financial analysts' higher earnings forecast accuracy. We analyze the effect of the analyst supply proxied by the number of universities and the number of finance and economics universities located in the same city as the headquarters of brokerage firms. Our findings suggest that brokerage firms located closer to a larger supply of potential analyst candidates are associated with higher analyst forecast accuracy, as observed by a lower forecast error. We further find that the degree of employed analysts' effort acts as a mediator between the supply of prospective analysts and the accuracy of their earnings forecasts.

Keywords: Labor market; Analyst supply; Earnings forecast accuracy; Financial analysts (search for similar items in EconPapers)
JEL-codes: G24 G30 M41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:84:y:2022:i:c:s1057521922003544

DOI: 10.1016/j.irfa.2022.102404

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