Brokerage M&As and the peer effect on analyst forecast accuracy |
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Affiliation: | 1. SILC Business School, Shanghai University;2. Boston Consulting Group, Shanghai, China;3. School of Accounting and Finance, Hong Kong Polytechnic University |
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Abstract: | We examine whether the impact of a change in the number of analysts a brokerage firm employs has an asymmetric effect on the forecasting ability of superior and inferior analysts. Specifically, we show that following brokerage M&As only superior analysts benefit from a rise in having a larger number of peers. In addition, we find that the market does not account for the improved performance among superior analysts, and argue that this creates an opportunity for investors to capitalize on this. |
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