What is an II ranked analyst?
II = Institutional Investor. This magazine has annual rankings of the top sell-side analysts for every sector.
Does the All-Star Award affect Analysts performance?
We find that all-star analysts become bolder and less accurate in their forecasts, yet generate higher market reactions with their forecast revisions, relative to analysts with a similarly high number of votes but fall just short of all-star status.
Do professional rankings affect analyst behavior evidence from a regression discontinuity design?
Winning analysts obtain higher priority during earnings conference calls and have better career outcomes. Overall, our evidence is consistent with award-winning analysts leveraging increased reputation and the associated market influence to induce more trade commissions and career benefits.
Do analysts change their behavior after winning an All-Star Award evidence from a regression discontinuity design?
Thus, we find no evidence that analyst effort or optimism changes after becoming an all-star. However, we do find that all- star analysts are bolder in their forecasts, and with the bolder forecasts, the all-star analysts become less accurate in their forecasts, relative to the non-all-star analysts.
How does winning an award affect professional behavior evidence from analysts who become All Stars?
Our results show that all-star status emboldens analysts to be bolder at the expense of accuracy, and that investors respond with greater market reactions. Winning a significant industry or professional award typically provides the recipient newfound recognition, respect, opportunity, and influence, among other things.
How does reputational capital affect professional behavior evidence from analysts who become All Stars?
In additional analyses, we find that our main result on all-star status and increases in forecast optimism is more pronounced for analysts who were an all-star in the past, which suggests that past reputational capital could reinforce the effect of increased reputational capital in the present.