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Does time-space compression affect analyst forecast performance?

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  • Chen, Kejing
  • Guo, Wenqi
  • Jiang, Lin
  • Xiong, Xiong
  • Yang, Mo

Abstract

Despite the increasing attention given to the time-space compression effect brought by improved transportation, the economic consequences, especially those on analyst forecast performance, have yet to be explored. Based on difference-in-difference model designs and a sample of China’s stock markets, we find robust empirical evidence that high-speed railway connections have a significantly positive effect on analyst forecast performance from various perspectives. We further conduct counterfactual analyses to examine the underlying mechanism and analyse the influence of high-speed railway connections on analysts’ stock recommendations. This study contributes to the influencing factors for sell-side analyst performance and the effect of geographic proximity on information efficiency.

Suggested Citation

  • Chen, Kejing & Guo, Wenqi & Jiang, Lin & Xiong, Xiong & Yang, Mo, 2022. "Does time-space compression affect analyst forecast performance?," Research in International Business and Finance, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:riibaf:v:62:y:2022:i:c:s0275531922001076
    DOI: 10.1016/j.ribaf.2022.101719
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    1. Li, Bin & Zhao, Qizi & Shahab, Yasir & Kumar, Satish, 2023. "High-speed rail construction and labor investment efficiency: Evidence from an emerging market," Research in International Business and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    High-speed railway connections; Analyst forecast performance; Site visits; Information asymmetry; Stock recommendation;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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