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We examine the relation between accounting reporting complexity and analysts’ performance and whether analysts’ qualifications, experience, and expertise in specific financial domains help them more effectively process complex information. We document an inverse relation between complexity and analysts’ performance. Further, we show that analysts’ firm-specific experience, industry focus, and CFA certification alleviate some of the adverse effects of complexity, whereas analysts’ general experience does not appear to do so. Using an XBRL-based approach, we also develop new measures of analysts’ expertise and find that expertise in the areas of fair value, derivatives and pension are more valuable than other analyst characteristics in attenuating the negative effects of complexity arising from transactions and events in these areas. Overall, this study underscores the importance of analyst characteristics and the need to simplify the complex disclosures in the notes to the financial statements.

Firms adopting deviant strategies are generally subject to impaired legitimacy and heightened risk. Based on the legitimacy literature, we hypothesize that strategically deviant firms are motivated to engage in corporate social responsibility activities as protection from a potential legitimacy loss. Using a sample of Chinese-listed firms during the 2003–2011 period, we find that firms with deviant strategies are more likely to engage in charitable donations. In addition, the positive effect of strategic deviance on donations is alleviated when firms communicate effectively with financial analysts, and when block holders largely own these firms.

Taking advantage of a recently established dataset that records financial analysts’ firm visits, this study examines the factors that determine the number of buy-side and sell-side analyst firm visits in a given year and how investors respond to these visits. Both buy-side and sell-side analysts seem motivated to visit firms when they are considering buying or recommending that investors buy shares rather than when they are considering selling or when they are recommending that investors sell shares. However, there are still significant differences in the firms that buy-side and sell-side analysts choose to visit. Using a binomial count model, this study shows that buy-side analyst firm visits are heavily focused on industry leaders—firms with a high share of the total revenue in their given industry—while sell-side analyst firm visits are not. By looking at the response of investors to buy-side or sell-side analyst firm visits, a regression analysis uncovers evidence that investors trust buy-side analysts, responding to firm visits by buy-side analysts by purchasing more shares in the firm. Investors do not have the same level of confidence in sell-side analysts. Investors respond to firm visits by sell-side analysts by selling more shares in the firm. This phenomenon is even more significant for firms that are outperforming the market. The results suggest that there is a significant cost to the conflict of interest inherent in sell-side analysts’ research. These costs increase when analysts recommend outperforming firms to the public.

Hospitals continue to experience negative margins, with hospital expenses decreasing slightly since the start of the pandemic, but not enough to address impacted volumes and revenues. As a result, issues regarding hospital and health system debt and financial sustainability weigh heavily on health care administrators. Hospital finances, and specifically, the management of bonds and debt, are of vital concern, particularly in light of the elimination of CARES Act funding and the forthcoming expiration of the federal Public Health Emergency COVID-19 plan. In this article and accompanying podcast episode, Nursing Economics Editorial Board Member Dr. Therese Fitzpatrick talks with leading health care expert Lisa Goldstein, MPA, about the rising pressures to maintain financial sustainability as hospital margins react to post-pandemic admissions and related adjustments.

This study empirically tests the hypothesis in the literature that women, in their investment decisions, tend to show greater risk aversion and/ or a lower degree of optimism than their male counterparts by analyzing investment recommendations by Equity Research analysts in Brazil. Based on a sample of 7496 recommendations for the main companies listed on the B3 between 2009-2021, a statistically significant effect was found in the opposite direction to that predicted: recommendations made by women tended to be more optimistic. We found that the difference is specific to sell recommendations, issued more frequently by men and that the effect disappears when controlling for the coverage sector and institution, which suggests that the difference is due to the fact of women, who account for only 12.8% of all recommendations, focus on covering specific sectors, such as consumption. Keywords: gender, overconfidence, Equity Research, equities, stocks. Este estudo busca testar empiricamente a hipotese, presente na literatura, de que, em suas decisdes de investimento, mulheres tenderiam a apresentar maior aversao ao risco e/ou menor grau de otimismo do que seus pares homens baseado na analise das recomendagoes de investimento por parte de analistas de Equity Research no Brasil. Numa amostra com 7496 recomendagoes para as principais empresas listadas na B3 entre 2009-2021, encontrou-se um efeito estatisticamente significativo na direcao oposta ao previsto: recomendagoes feitas por mulheres tenderam a ser mais otimistas. Verificou-se que a diferenga se da especificamente nas recomendagoes de venda, emitidas mais frequentemente por homens, e que o efeito desaparece ao se controlar o setor de cobertura e a instituido a que o analista pertence. Ou seja, sugere que a diferenga ocorre porque mulheres, que respondem por apenas 12,8% do total de recomendagoes, se concentrarem na cobertura de setores especificos, como consumo. Palavras-chave: genero, excesso de autoconfianga, Equity Research, renda variavel, agoes. Este estudio se propone probar empiricamente la hipotesis de que las mujeres en sus decisiones de inversion tienden a mostrar una mayor aversion al riesgo y lo un menor grado de optimismo que los hombres analizando las recomendaciones de inversion realizadas por analistas de Equity Research en Brasil. A partir de una muestra de 7496 recomendaciones para empresas que cotizan en la B2 entre 2009-2021, se encontro un efecto estadisticamente significativo en sentido contrario al previsto: las recomendaciones realizadas por mujeres tendieron a ser mas optimistas. Se verifico que la diferencia se da especificamente en las recomendaciones de venta, emitidas con mayor frecuencia por los hombres, y que el efecto desaparece al controlar por sector de cobertura e institucion a la que pertenece el analista, lo que sugiere que la diferencia se debe a que las mujeres, que representan solo el 12,8% de todas las recomendaciones, se centran en la cobertura de sectores como el consumo. Palabras clave: genero, exceso de confianza, Equity Research, renta variable, acciones.

This study examines analyst information intermediary roles using a textual analysis of analyst reports and corporate disclosures. We employ a topic modeling methodology from computational linguistic research to compare the thematic content of a large sample of analyst reports issued promptly after earnings conference calls with the content of the calls themselves. We show that analysts discuss exclusive topics beyond those from conference calls and interpret topics from conference calls. In addition, we find that investors place a greater value on new information in analyst reports when managers face greater incentives to withhold value-relevant information. Analyst interpretation is particularly valuable when the processing costs of conference call information increase. Finally, we document that investors react to analyst report content that simply confirms managers’ conference call discussions. Overall, our study shows that analysts play the information intermediary roles by discovering information beyond corporate disclosures and by clarifying and confirming corporate disclosures. The Internet appendix is available at https://doi.org/10.1287/mnsc.2017.2751 . This paper was accepted by Suraj Srinivasan, accounting.

This paper examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on the ability of financial analysts to forecast earnings accurately in Jordan during the period 2002–2013. The methodology involved the use of a panel data model and the regression with temporal “dummy” variables in order to test the hypotheses formulated for the study. The research findings show after mandatory IFRS adoption has improvements in the ability of analysts to forecast earnings (decrease in error and dispersion). These findings are evidence of an improvement in earnings quality of Jordan listed firms after the collective requirement to adopt IFRS. The evidence from the study also shows the debate on the desirability of the current move towards one global set of accounting standards as results are robust to several changes in model specifications. The study contributes to the previous finding dealing with the additional quality informational content stemming and, more specifically the quality of earnings from mandatory of IFRS adoption. The originality of this study consists primarily in the use of a long analysis period following the implementation of IFRS that should reduce divergences between analysts, causing a decrease in earnings forecast error and dispersion. Therefore, this study examines only the Jordan context; it’s interesting for future research to study the effect of IFRS mandatory adoption for several countries, especially in emerging market.

This paper examines whether the mandatory adoption of IFRS/IAS in the European Union is beneficial in terms of the information content of earnings. The informational relevance of earnings was reflected by the level of information asymmetry measured by the cost of capital and the financial analysts’ forecasts. So, the article purpose is to study the impact of IFRS adoption on the cost of capital and on the financial analysts’ forecasts. Using an unbalanced panel data of firm—year observations spanning from 2002 to 2012, we hypothesize and empirically find the following. First, IFRS adoption represents a key determinant of information asymmetry reduction, as it contributes significantly to the decrease in the capital cost for the post-IFRS period. Second, the adoption of these international standards has significantly contributed to the improvement of financial analysts’ forecasts reflected by an enhancement of the forecasts properties, a decrease in dispersion and error. The results contribute to the literature dealing with the additional informational content stemming from IFRS mandatory adoption. The originality of this study consists primarily in the use of a long analysis period which eliminates any bias relating to the period of learning and understanding of IFRS and any bias related to the financial crisis started in 2007 and secondly in the use of two measurements of information asymmetry which makes the results obtained more robust.

We study whether sell-side financial analysts’ physical attractiveness is associated with their job performance. We find that attractive analysts make more accurate earnings forecasts than less attractive analysts. Moreover, more attractive analysts make stock recommendations that are more informative in the short run and more profitable in the long run. Additional analyses reveal that attractive analysts attain their better job performance at least partly through their privileged access to information from firm management. For the sources of the beauty effect, we find that more attractive analysts gain more media exposure, have better connections to institutional investors, and receive more internal support from their employers. Additional evidence suggests that analysts’ physical appearance per se at least partly explains our findings. Overall, our study shows that physical attractiveness has a profound impact on the job performance and information access of sell-side financial analysts. This paper was accepted by Shiva Rajgopal, accounting.

This study posits that security analysts heed corporate social performance information and factor it into their recommendations to general investors. In particular, as corporate social performance is often uncertain and ambiguous to general investors, analysts may serve as the informational pathway connecting corporate social performance to firm stock returns. Thus, we argue that analyst recommendations mediate the relationship between corporate social performance and firm stock returns. On the basis of not only a qualitative study with literature searches and interviews of stock analysts but also a quantitative study with two longitudinal samples of large firms, we find support for these arguments. Our findings uncover an informationbased underlying mechanism for the link between corporate social performance and financial performance.