Tournaments of financial analysts

Huifang Yin and Huai Zhang ()
Additional contact information
Huifang Yin: Shanghai University of Finance and Economics
Huai Zhang: Nanyang Technological University

Review of Accounting Studies, 2014, vol. 19, issue 2, No 2, 573-605

Abstract: Abstract We argue that financial analysts can be viewed as participants of two tournaments (the “All-Star” tournament and the intrafirm tournament) and examine whether analysts are incentivized by the tournament compensation structure. Using data from 1991 to 2007, we find that interim losers are more likely to increase the boldness of their forecasts in the remainder of the tournament period than interim winners. This finding survives several robustness checks and is more pronounced when the interim assessment date is closer to the end of the tournament period, when analysts are inexperienced, and when the market activity is high. In addition, we show that interim losers’ changes in boldness are less informative than interim winners’. Collectively, our findings suggest that viewing financial analysts as participants of tournaments provides a useful framework for understanding analysts’ behavior.

Keywords: Tournament theory; Boldness; Financial analysts (search for similar items in EconPapers)
JEL-codes: G17 G20 G24 M40 M41 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11142-013-9255-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:reaccs:v:19:y:2014:i:2:d:10.1007_s11142-013-9255-6

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-013-9255-6

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().