Tournaments of financial analysts

• 成果类型: Article
• 署名作者: Yin, Huifang; Zhang, Huai
• 署名单位: Shanghai University of Finance & Economics; Nanyang Technological University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-013-9255-6
• 发表日期: 2014
• 页码: 573-605
• 关键词: BIASED EARNINGS FORECASTS; mutual fund industry; SECURITY ANALYSTS; investment recommendations; career concerns; incentives; performance; COMPENSATION; credibility; environment

摘要

We argue that financial analysts can be viewed as participants of two tournaments (the All-Star tournament and the intrafirm tournament) and examine whether analysts are incentivized by the tournament compensation structure. Using data from 1991 to 2007, we find that interim losers are more likely to increase the boldness of their forecasts in the remainder of the tournament period than interim winners. This finding survives several robustness checks and is more pronounced when the interim assessment date is closer to the end of the tournament period, when analysts are inexperienced, and when the market activity is high. In addition, we show that interim losers' changes in boldness are less informative than interim winners'. Collectively, our findings suggest that viewing financial analysts as participants of tournaments provides a useful framework for understanding analysts' behavior.