The Use and Usefulness of Big Data in Finance: Evidence from Financial Analysts

Feng Chi (), Byoung-Hyoun Hwang () and Yaping Zheng ()
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Feng Chi: Cornell S.C. Johnson College of Business, Cornell University, Ithaca, New York 14850
Byoung-Hyoun Hwang: Nanyang Business School, NTU, Singapore 639956
Yaping Zheng: Alberta School of Business, University of Alberta, Edmonton, Alberta T6G 2R6, Canada

Management Science, 2025, vol. 71, issue 6, 4599-4621

Abstract: Alternative data have become a new source of information for investors. This paper examines how this development is reshaping the role of sell-side analysts. Employing textual analysis of analysts’ written reports, we show that analysts themselves have begun to adopt alternative data in their analyses. Furthermore, we find that when analysts report drawing from alternative data they generate more accurate earnings forecasts, and their brokerages subsequently receive higher amounts in trading commissions from investors, suggesting that investors value the adoption of alternative data by analysts.

Keywords: big data; alternative data; sell-side analysts; investors (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:6:p:4599-4621

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