When attention is away, analysts misplay: distraction and analyst forecast performance

Thomas Bourveau, Alexandre Garel, Peter Joos () and Arthur Petit-Romec
Additional contact information
Thomas Bourveau: Columbia University
Alexandre Garel: Audencia Business School
Peter Joos: INSEAD
Arthur Petit-Romec: TBS Education

Review of Accounting Studies, 2024, vol. 29, issue 1, No 26, 916-958

Abstract: Abstract We construct a distraction measure based on extreme industry returns to gauge whether analysts’ attention is away from certain stocks under coverage. We find that temporarily distracted analysts make less accurate forecasts, revise forecasts less frequently, and publish less informative forecast revisions, relative to undistracted analysts. Further, at the firm level, analyst distraction carries real negative externalities by increasing information asymmetry for stocks that suffer from a larger extent of analyst distraction during a given quarter. Our findings thus augment our understanding of the determinants and effects of analyst effort allocation and broaden the literature on distraction and information spillover in financial markets.

Keywords: Limited attention; Distraction; Effort allocation; Analyst; Forecasts; Information environment (search for similar items in EconPapers)
JEL-codes: G10 G11 G14 G41 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11142-022-09733-w

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