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An Analyst by Any Other Surname: Surname Favorability and Market Reaction to Analyst Forecasts

Jung, J. H. ORCID: 0000-0002-1993-9419, Kumar, A., Lim, S. S. and Yoo, C-Y. (2019). An Analyst by Any Other Surname: Surname Favorability and Market Reaction to Analyst Forecasts. Journal of Accounting and Economics, 67(2-3), pp. 306-335. doi: 10.1016/j.jacceco.2019.02.002

Abstract

We find that forecast revisions by analysts with more favorable surnames elicit stronger market reactions. The effect is stronger among firms with lower institutional ownership and for analysts with non-American first names. Following the 9/11 terrorist attacks, and France and Germany’s opposition to the Iraq War, revisions by analysts with Middle Eastern and French or German surnames, respectively, generated weaker market reaction. Surname favorability is not associated with forecast quality, but it has complementary effects with forecast performance on analysts’ career outcomes. Surname favorability mitigates under-reaction to forecast revisions. These findings are distinct from the effects of ethnic, cultural proximity, or in-group bias.

Publication Type: Article
Additional Information: © 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords: Equity analyst, surname favorability, earnings forecast, market reaction, motivated reasoning.
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
Date available in CRO: 21 Feb 2019 09:42
Date deposited: 21 February 2019
Date of acceptance: 18 February 2019
Date of first online publication: 22 February 2019
URI: https://openaccess.city.ac.uk/id/eprint/21678
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