ABSTRACT: Prior research has shown improvements in analysts’ forecast accuracy around various events (e.g., new disclosure regulations or cross-listings), but these studies do not consider a change in the composition and ability of the analysts providing forecasts over time. By studying foreign firms cross-listing on U.S. stock exchanges, we find that analyst composition changes by more than 50 percent during the three-year period around cross-listing. We show that cross-listing is associated with a shift away from analysts who are less accurate forecasters and toward analysts who are more accurate forecasters. This shift in analyst composition accounts for a significant improvement, of 9.5 percent, in analyst forecast accuracy. In addition, we document that changes in both analyst ability and public information disclosure affect analyst forecast accuracy around cross-listing. Our results indicate that researchers should control for changes in analyst composition and ability when measuring the impact of specific events on analyst forecast accuracy.
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Spring 2010
Research Article|
January 01 2010
The Effect of a Change in Analyst Composition on Analyst Forecast Accuracy: Evidence from U.S. Cross-Listings
Accepted:
November 01 2009
Online ISSN: 1558-8025
Print ISSN: 1542-6297
American Accounting Association
2010
Journal of International Accounting Research (2010) 9 (1): 23–38.
Citation
John Nowland, Andreas Simon; The Effect of a Change in Analyst Composition on Analyst Forecast Accuracy: Evidence from U.S. Cross-Listings. Journal of International Accounting Research 1 January 2010; 9 (1): 23–38. https://doi.org/10.2308/jiar.2010.9.1.23
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