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Brain gain of analysts in China: foreign experiences and forecast accuracy

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  • Lihua Liu
  • Dongmin Kong
  • Wei Yang

Abstract

Using unique data on analysts’ foreign experiences, we investigate how analysts’ foreign experiences affect forecast performance in China. Based on analysts’ education and work background overseas, we find that foreign experiences significantly increase analysts’ forecast accuracy. Our results are robust to different measures and alternative specifications. Mechanism tests show that the improvement of forecast accuracy can be attributed to an analyst’s foreign work background, education with high level degrees, and prior overseas analyst working experience. Further evidence suggests the influence of foreign work experiences on analysts’ forecast accuracy are more pronounced for firms with lower earnings quality and higher ownership concentration.

Suggested Citation

  • Lihua Liu & Dongmin Kong & Wei Yang, 2022. "Brain gain of analysts in China: foreign experiences and forecast accuracy," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2089-2129, June.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:2:p:2089-2129
    DOI: 10.1111/acfi.12855
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    1. Liu, Xingyu & Kok Loang, Ooi, 2023. "Analysts’ forecast optimism and cash holding: Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).

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