Do local analysts know more? A cross-country study of the performance of local analysts and foreign analysts

• 成果类型: Article; Proceedings Paper
• 署名作者: Bae, Kee-Hong; Stulz, Rene M.; Tan, Hongping
• 署名单位: University System of Ohio; Ohio State University; Queens University - Canada; University of Waterloo
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2007.02.004
• 发表日期: 2008
• 页码: 581-606
• 关键词: local analyst advantage; HOME BIAS; information asymmetry; analyst earnings forecasts; forecast precision for local and foreign stocks

摘要

This paper examines whether analysts resident in a country make more precise earnings forecasts for firms in that country than non-resident analysts. Using a sample of 32 countries, we find an economically and statistically significant local analyst advantage even after controlling for firm and analyst characteristics. The local advantage is high in countries where earnings are smoothed more, less information is disclosed by firms, and firm idiosyncratic information explains a smaller fraction of stock returns. It is negatively related to whether a firm has foreign assets and to market participation by foreign investors and by institutions, and positively related to holdings by insiders. The extent to which U.S. investors underweight a country's stocks is positively related to that country's local analyst advantage. (C) 2007 Elsevier B.V. All rights reserved.