Ranking Analysts by Network Structural Hole

This paper proposes a novel approach to rank analysts using their positions in a network constructed by peer analysts connected with overlapping firm coverage. We hypothesize that analysts occupying the network structural holes can produce higher quality equity research by a better access to their peer analysts’ wealth and diversity of information and knowledge. We report consistent empirical evidence that high-ranked analysts identified by network structural holes have greater ability to affect stock prices. Furthermore, those analysts tend to issue timely opinions, but not necessarily more accurate or consistent earnings forecasts. Analysts occupying structural holes tend to be more experienced, have a higher impact on stock prices when they work for large brokerages, and are rewarded with better career outcomes.