Time: 14:00-15:00, 10 April 2025
Speaker: Ying Hao is a professor, doctoral supervisor, member of the Academic Committee of the Business School at Beijing Normal University, and Director of the Research Center for State-Owned Assets and State-Owned Enterprises. He was a visiting scholar at Columbia Business School. He is a National Accounting Leading Talent of the Ministry of Finance, an expert in cadre education and training for the Ministry of Human Resources and Social Security, a member of the Foreign Academic Exchange Committee of the Accounting Society of China, a member of the Financial Management Committee of the China Association of Chief Financial Officers, and a council member of the China Association of Foreign Trade Accounting. As principal investigator, Professor Hao has led three National Natural Science Foundation of China projects and one Ministry of Education humanities and social sciences project. In recent years, he has published more than 40 papers as first author in major domestic and international journals, including Review of Accounting Studies, Financial Management, Pacific Basin Finance Journal, International Review of Financial Analysis, Economic Research Journal, Management World, Journal of Management Sciences in China, Nankai Business Review, Journal of Financial Research, Accounting Research, Journal of Finance and Economics, and Chinese Journal of Management Science. He received the Eighth Higher Education Scientific Research Outstanding Achievement Award in Humanities and Social Sciences.
Abstract:
We examine whether and how analysts' incentives to win the All-Star award by strategically increasing visibility among fund managers affect their research quality and career outcomes. We first document that analysts have stronger incentives to make more fund managers aware of their existence in the third calendar quarter of the year (Q3), the quarter right before star analyst voting, than in any other quarter; they issue earnings forecasts more frequently, but write research reports with a smaller average length, and are more likely to cover a new firm. We exclude several alternative explanations, including that analysts' strategic behaviors just proxy for analyst ability and general career concern. The results are more pronounced for analysts with stronger incentives to become a star analyst, for firms with higher institutional ownership, and when analysts work for a smaller brokerage house. We refer to analyst forecasts driven by incentives to seek visibility among fund managers as Visible forecasts. We find that Visible forecasts are less accurate but bolder than peer forecasts. Visible forecasts are also associated with smaller market reactions. We further show that fund managers respond to these Visible forecasts partly: in the post-Q3, they are more likely to time their corporate site visit to coincide with when analysts issuing higher-quality Visible forecasts is visiting the firm. Lastly, we find that while issuing more accurate Visible forecasts helps analysts' chances of attaining All-Star status, seeking visibility is also costly. In an industry with more intensive competition, analysts who issue less accurate Visible forecasts are more likely to be penalized to decline to a less prestigious brokerage house or even exit the profession. Overall, our findings document an underexplored analysts' opportunistic practice to win the All-Star award.
