Hierarchy and Performance of Analyst Teams

Wen He, Andrew B. Jackson and Chao Kevin Li

European Accounting Review, 2020, vol. 29, issue 5, 877-900

Abstract: We examine the effect of hierarchy on analyst teams’ performance using a large sample of financial analysts from China. Hierarchy, defined as the disparity in power or status within a group, which we operationalize as the difference in experience between the senior and junior analyst in a team, is an important aspect of team structure that could affect team performance. We find that analyst teams with a hierarchy outperform flat teams (teams without a clear hierarchy). Specifically, hierarchical teams issue forecasts with higher accuracy, less optimism bias, less co-movement with the consensus, and stronger investor reactions. The results remain robust after we control for a number of firm and analyst characteristics and fixed effects. Further analysis shows that working in a hierarchical team helps junior analysts improve their individual forecasts for other firms, and senior analysts also benefit from working with junior analysts in hierarchical teams. Our results provide important insights into understanding the effect of team structure on the performance of analyst teams who issue majority of earnings forecasts.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/09638180.2020.1714460 (text/html)
Access to full text is restricted to subscribers.

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:taf:euract:v:29:y:2020:i:5:p:877-900

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAR20

DOI: 10.1080/09638180.2020.1714460

Access Statistics for this article

European Accounting Review is currently edited by Laurence van Lent

More articles in European Accounting Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().