Mutual Forbearance and Competition Among Security Analysts

• 成果类型: Article
• 署名作者: Baum, Joel A. C.; Bowers, Anne; Mohanram, Partha
• 署名单位: University of Toronto
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2015.2205
• 发表日期: 2016
• 页码: 1610-1631
• 关键词: mutual forbearance; multipoint contact; SECURITIES ANALYSTS; Regulation Fair Disclosure

摘要

Research in industrial organization and strategic management has shown that rivals competing with each other in multiple markets are more willing to show each other mutual forbearance, i.e., compete less aggressively, within their spheres of influence, i.e., the markets in which each firm dominates. Sell-side equity analysts typically cover multiple stocks in common with their rivals. We examine the impact of this multipoint contact for mutual forbearance on two key dimensions of competition among security analysts: forecast accuracy and information leadership ( issuing earnings forecasts or stock recommendations that influence rival analysts). We find that multipoint contact is associated with analysts exerting greater information leadership on stocks within their own spheres of influence. We also find greater forbearance related to information leadership under Regulation Fair Disclosure (Reg FD). In contrast, multipoint contact was not associated with greater forecast accuracy on stocks within analysts' spheres of influence, either before or under Reg FD. Our analysis is among the first to consider mechanisms of competition among securities analysts and also adds to the literature on Reg FD by demonstrating that the increased workload imposed on analysts after Reg FD fostered mutual forbearance as a response.