An analyst by any other surname: Surname favorability and market reaction to analyst forecasts |
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| Institution: | 1. Cass Business School, City, University of London, UK;2. School of Business Administration, University of Miami, Coral Gables, FL 33124, USA;3. Driehaus College of Business, DePaul University, USA;4. KAIST College of Business, South Korea;1. Terry College of Business, University of Georgia, USA;2. Edwin L. Cox School of Business, Southern Methodist University, USA;1. Naveen Jindal School of Management, The University of Texas, Dallas 800W Campbell Road, Richardson, TX 75080, USA;2. London Business School, Regents Park, London, NW1 4SA United Kingdom;1. Smeal College of Business, Pennsylvania State University, PA, USA;2. Gies College of Business, University of Illinois at Urbana-Champaign, IL, USA;3. School of Accountancy, Shanghai University of Finance and Economics, Shanghai, PR China;1. Fisher College of Business, The Ohio State University, 2100 Neil Avenue, Columbus, OH 43210, United States;2. Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, ON M5S 3E6, Canada;3. Carlson School of Management, University of Minnesota, 321 19th Avenue S., Minneapolis, MN 55455, United States |
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| 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. |
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