ABSTRACT: This study compares the performance of sell‐side equity analysts with and without a Chartered Financial Analyst® (CFA) designation. Using a large sample of forecasts, our tests indicate that CFA charterholders issue forecasts that are timelier than those of non‐charterholders. The results for accuracy are mixed. We establish that while charterholders perform at statistically significant higher levels than non‐charterholders in some tests, the economic significance of these differences is questionable. For a subsample of analysts, we find evidence that charterholders improve along the dimension of timeliness after they receive their CFA charter. This result provides support for a human‐capital explanation in which charterholders improve their productivity during the CFA program. Finally, we show that the market reaction for smaller firms is stronger for charterholders than non‐charterholders after controlling for timeliness, boldness, accuracy, and optimism. This result provides evidence consistent with “credentialism,” a variant of signaling theory in which a professional's education level provides a signal about the professional's quality to his or her clients.
