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What determine financial analysts' career outcomes during mergers?

Author

Listed:
  • Wu, Joanna Shuang
  • Zang, Amy Y.

Abstract

We investigate the effects of mergers on the career outcomes of financial analysts. We hypothesize and find that analysts with good earnings forecast performance experience higher turnover during mergers, target analysts are more likely to turnover and the existence of a competing analyst in a merger counter party also increases analyst turnover. We analyze the promotion of analysts to research executive positions and find that analysts with greater experience and especially experienced stars are more likely to be promoted. Finally, we document that analyst turnover is associated with decreases in research quality at the merged firms post-merger.

Suggested Citation

  • Wu, Joanna Shuang & Zang, Amy Y., 2009. "What determine financial analysts' career outcomes during mergers?," Journal of Accounting and Economics, Elsevier, vol. 47(1-2), pages 59-86, March.
  • Handle: RePEc:eee:jaecon:v:47:y:2009:i:1-2:p:59-86
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bing Guo & David Pérez-Castrillo & Anna Toldrà-Simats, 2017. "Firms’ Innovation Strategy under the Shadow of Analyst Coverage," Working Papers 980, Barcelona Graduate School of Economics.
    2. repec:eee:corfin:v:45:y:2017:i:c:p:84-103 is not listed on IDEAS
    3. Quoc-Anh Do & Bang Dang Nguyen & Raghavendra- University Of Cambridge, Cambridge Judge Business School) Rau, 2013. "Sugar and Spice and Everything Nice: What Are Good Directors Made of?," Sciences Po publications info:hdl:2441/69eil0vrec8, Sciences Po.
    4. Chen, Tao & Harford, Jarrad & Lin, Chen, 2015. "Do analysts matter for governance? Evidence from natural experiments," Journal of Financial Economics, Elsevier, vol. 115(2), pages 383-410.
    5. Healy, Paul M., 2009. "Discussion of "What Determines Financial Analysts' Career Outcomes During Mergers?"," Journal of Accounting and Economics, Elsevier, vol. 47(1-2), pages 87-90, March.
    6. Jung, Boochun & Shane, Philip B. & Sunny Yang, Yanhua, 2012. "Do financial analysts' long-term growth forecasts matter? Evidence from stock recommendations and career outcomes," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 55-76.
    7. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    8. Hong Zhu & Qi Zhu, 2016. "Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1107-1149, December.
    9. Allen, Arthur & Francis, Bill B. & Wu, Qiang & Zhao, Yijiang, 2016. "Analyst coverage and corporate tax aggressiveness," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 84-98.
    10. Pandit, Shailendra & Willis, Richard H. & Zhou, Ling, 2012. "Security analysts, cash flow forecasts, and turnover," International Journal of Forecasting, Elsevier, vol. 28(4), pages 874-890.

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