Does Competition Improve Analysts' Forecast Informativeness?

• 成果类型: Article
• 署名作者: Banerjee, Sanjay
• 署名单位: University of Alberta
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3544
• 发表日期: 2021
• 页码: 3219-3238
• 关键词: tournaments; analyst rankings; Information revelation; Relative performance

摘要

This paper studies the effect of competition on analysts' forecast informativeness. Analysts compete to achieve a higher rank in forecast accuracy. Competition can impair, improve, or have no effect on analysts' forecast informativeness. Competition impairs informativeness if and only if the prior uncertainty of the economic state is high, and analysts' private signals are positively correlated conditional on the state. The more intense the competition in terms of a higher prize-to-penalty ratio and a stronger signal correlation, the less informative the forecasts. The higher the number of competing analysts, the greater the likelihood that analyst forecasts are less informative.