The Accounting Review Vol. 97 No. 4 2022
Can FinTech Competition Improve Sell-Side Research Quality?
Abstract
We examine how increased competition stemming from an innovation in financial technology influences sell-side analyst research quality. We find that firms added to Estimize, an open platform that crowdsources short-term earnings forecasts, experience a pervasive and substantial reduction in consensus bias and a limited increase in consensus accuracy relative to matched control firms. Long-term forecasts and investment recommendations remain similarly biased, alleviating the concern that the documented reduction in bias is a response to broad economic forces. At the individual analyst level, we find that bias reduction is more pronounced among close-to-management analysts, and that more biased analysts respond by reducing their coverage of Estimize firms. The collective evidence suggests that competition from Estimize improves sell-side research quality by discouraging strategic bias.
- DOI
- 10.2308/tar-2019-0266
- Volume
- 97
- Issue
- 4
- Pages
- 287-316
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref