Balancing Act: How Unaffiliated Analysts Navigate Private Information Disadvantages
Abstract
Using analyst-lender affiliation in syndicated loans as a proxy for differential access to private information, we examine how unaffiliated analysts respond to this disadvantage. We find that unaffiliated analysts are more likely to herd toward affiliated analysts following loan origination, leading to improved forecast accuracy but weaker market reactions, consistent with reduced information content. In addition, herding analysts improve their forecast accuracy for other firms in their portfolios relative to nonherding analysts, suggesting a reallocation of effort. To capture information acquisition directly, we analyze IP address data from SEC EDGAR log files and find that unaffiliated analysts increase search activity, driven primarily by those not designated as herding. Although herding behavior wanes after the first year post-loan, elevated EDGAR searches persist for three years. Overall, our study provides novel evidence on how selective access to private information influences analysts’ competitive behavior. Data Availability: Data used in this study are available from public sources identified in the text, subject to the terms and conditions of those sources.
- DOI
- 10.2308/tar-2025-0183
- Pages
- 1-25
- Language
- en
- Sources
- crossref