Journal of Banking & Finance Vol. 37 No. 1 2013
Do star analysts know more firm-specific information? Evidence from China
Abstract
Using a unique database in China, we extend the literature to further distinguish the information production role of star vs. non-star analysts. We confirm the general conclusion of a positive association between analyst coverage and stock return synchronicity measured by a firm’s R2 in China. The findings from star analysts, however, show that star analyst coverage actually decreases stock return synchronicity. We contend that the firm-specific human capital in star analysts helps the analysts overcome the challenges of information production in an emerging market. The superior firm-specific human capital argument of star analysts is further supported by the negative association of star analysts’ firm-specific experiences and stock return synchronicity. Our conclusions are robust to different specifications of star analyst presence and different definitions of analysts’ firm-specific experiences. We also find that star analysts exhibit a more accurate earnings forecast than non-star analysts.
- DOI
- 10.1016/j.jbankfin.2012.08.014
- Volume
- 37
- Issue
- 1
- Pages
- 89-102
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib