When attention is away, analysts misplay: distraction and analyst forecast performance

T. Bourveau, A. Garel (), P. Peter Joos and A. Petit-Romec
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A. Garel: Audencia Business School

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Abstract: We construct a measure of analyst-level distraction based on analysts' exposure to exogenous attention-grabbing events affecting firms under coverage. We find that temporarily distracted analysts achieve lower forecast accuracy, revise forecasts less frequently, and publish less informative forecast revisions relative to non-distracted analysts. Further, at the firm level, analyst distraction carries real negative externalities by increasing information asymmetry for stocks that suffer from a larger extent of analyst distraction during a given quarter. Our findings thus augment our understanding of the determinants and effects of analyst effort allocation and broaden the literature on distraction and information spillover in financial markets.

Keywords: Limited Attention; Distraction; Analyst; Forecasts; Information Environment (search for similar items in EconPapers)
Date: 2024-03
Note: View the original document on HAL open archive server: https://hal.science/hal-03844012v3
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Published in Review of Accounting Studies, 2024, 29 (1), ⟨10.1007/s11142-022-09733-w⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03844012

DOI: 10.1007/s11142-022-09733-w

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