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Information Sharing and Spillovers: Evidence from Financial Analysts

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  • Byoung-Hyoun Hwang

    (Dyson School of Applied Economics and Management, Cornell SC Johnson College of Business, Cornell University, Ithaca, New York 14853; and Korea University Business School, Korea University, Anam-dong, Seongbuk-gu, Seoul 136-701, Korea)

  • José María Liberti

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208; and Kellstadt Graduate School of Business, DePaul University, Chicago, Illinois 60604)

  • Jason Sturgess

    (School of Economics and Finance, Queen Mary University of London, London E1 4NS, United Kingdom)

Abstract

We study how information sharing within an organization affects individual performance. We look at situations in which the same analyst, while working at the same broker, covers multiple mergers and acquisitions (M&As), in particular the acquirer prior to the M&A and the merged firm thereafter. We find that earnings forecasts for the merged firm are significantly more accurate when the analyst has a colleague (working at the same broker) covering the target prior to the M&A. This holds particularly true if acquirer analysts and target analysts reside in the same locale, if they are part of a smaller team, and if the target analyst is of higher quality. Our findings highlight the importance of information spillovers on individual performance in knowledge-based industries.

Suggested Citation

  • Byoung-Hyoun Hwang & José María Liberti & Jason Sturgess, 2019. "Information Sharing and Spillovers: Evidence from Financial Analysts," Management Science, INFORMS, vol. 65(8), pages 3624-3636, August.
    • Handle: RePEc:inm:ormnsc:v:65:y:2019:i:8:p:3624-3636
    DOI: 10.1287/mnsc.2017.2986
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    12. Chen, Chen & Wang, Tao & Jia, Ximeng, 2023. "Short-termism in financial decision-making: Uncovering the influence of managerial myopia on corporate financial asset allocation through MD&A textual analysis," International Review of Financial Analysis, Elsevier, vol. 90(C).
    13. Hope, Ole-Kristian & Su, Xijiang, 2021. "Peer-level analyst transitions," Journal of Corporate Finance, Elsevier, vol. 70(C).
    14. Maria P. Roche & Alexander Oettl & Christian Catalini, 2024. "Proximate (Co-)Working: Knowledge Spillovers and Social Interactions," Management Science, INFORMS, vol. 70(12), pages 8245-8264, December.
    15. F. S. Zijlstra & A. A. Alblas & F. Langerak, 2024. "Cross-Site and Cross-Generation Knowledge Transfer in High-Tech After-Sales Service," Service Science, INFORMS, vol. 16(3), pages 155-171, September.
    16. Choi, Hae Mi & Gupta-Mukherjee, Swasti, 2022. "Analysts’ reliance on industry-level versus firm-specific information: Implications for information production," Journal of Banking & Finance, Elsevier, vol. 143(C).
    17. Lisheng Yu & Zehao Wang & Wentao Li, 2026. "Analysts' Technological Proximity Knowledge and Earnings Forecasts," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 238-258, March.
    18. Tian, Zhifan & Zeng, Cheng (Colin) & Li, Chaofan & Wu, Yi, 2025. "Peer effects of star-analysts' departure: New evidence from China," Journal of Corporate Finance, Elsevier, vol. 94(C).
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    20. Li, Yi & Zhang, Wei & Wang, Pengfei, 2021. "Working online or offline: Which is more effective?," Research in International Business and Finance, Elsevier, vol. 58(C).
    21. Tim Martens & Christoph J. Sextroh, 2021. "Analyst Coverage Overlaps and Interfirm Information Spillovers," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 59(4), pages 1425-1480, September.
    22. Huai-Chun Lo & Chia-Ying Chan, 2023. "Mean reverting in stock ratings distribution," Review of Quantitative Finance and Accounting, Springer, vol. 60(3), pages 1065-1097, April.
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