Earnings forecasts of female CEOs: quality and consequences

This study examines the voluntary disclosure of earnings forecasts by female CEOs. We find that in the backdrop of increased pressure to perform from investors and other stakeholders, female CEOs tend to issue more earnings forecasts than male CEOs, and those forecasts are more accurate. We also find that while financial analysts generally prefer to follow companies headed by male CEOs, female CEOs’ efforts to issue accurate earnings forecasts pay off, as these efforts help them close the analyst coverage gap. We provide complementary evidence on the disclosure efforts of female CEOs with regard to updates to the forecast and the 10-K report. Lastly, we show that financial analysts rely more on the earnings forecasts of female CEOs, possibly because they recognize female CEOs’ superior forecasting quality. Our results are robust to the use of alternative research designs, including difference-in-difference, propensity score matching, and entropy balancing. Overall, our study documents gender differences in voluntary disclosure by senior management.

Spillover Effects of Analyst Coverage on IPO Firms

This study investigates the effect of analysts’ recommendations and earnings forecasts for newly listed firms in the same industry. IPO underpricing is significantly lower as the number of firms whose investment recommendations are upgraded increases, supporting the contagion effect hypothesis that a high affinity for the industry has a positive effect on the IPO offer price. However, as the number of listed firms with higher earnings forecasts increases, IPO underpricing is higher, which supports the competitive effect hypothesis that the profit growth of competitors negatively affects IPO firms’ competitiveness. The effects vary depending on the competitive positions of both listed firms and IPO firms within the industry. The results also show that in industries with high concentration (i.e. low competition) , analyst information on listed firms has a greater contagion effect, while the competition effect hypothesis that better earnings forecasts for rival firms negatively affect IPO firms’ competitive position is not supported. This study contributes to the literature by analyzing the information spillover effect of analyst coverage in the IPO market by showing that the effects vary depending on the firms’ competitive positions as well as industry competition.

Impact of market-wide versus firm-specific information on financial analysts

PurposeThis paper documents the effect of different types of information on the value of financial analysts.Design/methodology/approachThe authors use the pooled OLS regression and the data of nonfinancial firms from France to test our hypotheses. The data covers the period between 1997 and 2019.FindingsThe results show that analysts are more likely to cover those firms that incorporated greater proportion of market-wide information in their prices. Consistent with the economies of scale view, the authors argue that analysts specialize in the interpretation market-wide information. By doing so, they are able to cover relatively large number of firms simultaneously. The results also show that the value of analyst coverage (measured as the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) is a function of the extent to which different types of information are incorporated in prices. The authors’ results suggest that the impact of analyst coverage on firm value and on probability of crash is less pronounced in firms that incorporate greater proportion of market-wide information. In case of probability of jump, the results show that the impact of analyst coverage is more pronounced firms that incorporate greater proportion of market-wide information.Originality/valueThe major contribution of this paper is to document the impact of different types of information on the extent of analyst coverage. Furthermore, this paper also uses various measures (the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) to show how different types of information affects the value of analyst coverage.

Does Analyst Coverage Affect Workplace Safety?

We find firms’ work-related injury rates are negatively associated with the level of analyst coverage. This result is also robust at the establishment level at which we find local analysts have a more profound impact than distant analysts. Cross-sectionally, our results are exacerbated in firms with weak internal governance mechanisms and in industries with low union representation. Finally, management is more likely to discuss safety issues during earnings conference calls in the presence of more analysts. Overall, our results suggest analysts play an effective external monitoring role and have a subtle yet important impact on employee welfare. This paper was accepted by Brian Bushee, accounting.