Cultural Diversity on Wall Street: Evidence from Sell-Side Analysts’ Forecasts

Kenneth J. Merkley, Roni Michaely and Joseph Pacelli
Additional contact information
Kenneth J. Merkley: Indiana University - Kelley School of Business - Department of Accounting
Joseph Pacelli: Indiana University - Kelley School of Business - Department of Accounting

No 19-07, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We study the effect of cultural diversity on an industry’s labor force using information about sell-side research analysts’ cultural backgrounds and their output, the consensus earnings forecast. Using both exogenous shocks to analyst diversity and panel regression methods, we find that increases in cultural diversity positively affect the quality of the consensus earnings forecast. These positive effects of cultural diversity are also robust to controlling for other dimensions of diversity. We further explore earnings conference calls as one viable mechanism for our findings, and find that cultural diversity increases conference call participation and interaction, indicating that diversity improves information flows. Overall, our results indicate that cultural diversity on Wall Street can generate significant benefits for investors.

Keywords: Analysts; Cultural Diversity; Conference Calls (search for similar items in EconPapers)
Pages: 50 pages
Date: 2019-01, Revised 2019-03
New Economics Papers: this item is included in nep-cul
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3068232 (application/pdf)

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:chf:rpseri:rp1907

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().