Do Analysts and their Employers Value Access to Management? Evidence from Earnings Conference Call Participation
Speaker: Prof. Ling Cen (Chinese University of Hong Kong)
? Do Analysts and their Employers Value Access to Management? Evidence from Earnings Conference Call Participation
? 12:00pm-13:30pm, 2018/5/11
? Room A619, Teaching A
Prof. Ling Cen (Chinese University of Hong Kong)
A large literature examining analyst activity is premised on the idea that analysts and their employers benefit from access to management. We propose a readily observable indicator of access and show that access is valued by analysts and their employers. Our measure is based on the idea that analysts who are invited to ask the first questions in the Q&A session of an earnings conference call enjoy special access to management. These “early participants” are more successful in the labor market than peers from the same brokerage when their brokerages close. New sell-side employers are more likely to initiate coverage of stocks for which an analyst was an early participant. Early participants are more accurate in forecasting earnings and more optimistic in their stock recommendations. Our results indicate that our early participation measures reflect both connectivity to management as well as dimensions of analyst skill not captured in traditional measures of performance.