Accounting and Finance Seminar - Jay Jung (Cass Business School)
G.15, 15-19 Tyndalls Park Road
Title: Analysts’ Cultural Attitudes to Time Orientation
We study how analysts’ cultural attitudes affect their effort allocation to the production and quality of their long-term earnings forecasts, their stock recommendation profitability, and managerial myopia for the firms they cover. We find that analysts from ethnic groups that have a long-term oriented culture produce more long-term earnings forecasts, issue more timely long-term forecasts and more profitable stock recommendations. This positive association is more pronounced for firms with more long-term investments, for smaller firms, and during periods of higher economic uncertainty. Using quasi-natural experiments of brokerage houses’ mergers and closures, we find a positive and plausibly causal effect of the coverage by long-term oriented analysts on firm innovation. Our paper identifies an important determinant of analysts’ production of long-term earnings forecasts and also shows that, contrary to extant research finding that analysts’ coverage fosters managerial myopia, the coverage of long-term oriented analysts ameliorates managerial myopia.