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The differential effects of product market competition on individual analysts

Author

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  • Chung, Hanyong

Abstract

This study examines how product market competition differentially affects existing versus new analysts. I find that new analysts' coverage increase is significantly higher than the existing analysts' coverage increase when a portfolio firm faces high competition, suggesting existing analysts’ tendency to avoid competition among analysts for their career success. I also find that new analysts' one-year earnings forecasts accuracy decrease is significantly larger than the one of the existing analysts when the portfolio firm faces high competition. These findings indicate that existing analysts consider the situation firm faces, product market competition, and they are more competent than new analysts.

Suggested Citation

  • Chung, Hanyong, 2023. "The differential effects of product market competition on individual analysts," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323008279
    DOI: 10.1016/j.frl.2023.104455
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    More about this item

    Keywords

    Product market competition; Analysts coverage; Analyst forecast accuracy;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • 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
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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