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

Author

Listed:
  • T. Bourveau
  • A. Garel

    (Audencia Business School)

  • P. Peter Joos
  • A. Petit-Romec

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.

Suggested Citation

  • T. Bourveau & A. Garel & P. Peter Joos & A. Petit-Romec, 2024. "When attention is away, analysts misplay: distraction and analyst forecast performance," Post-Print hal-03844012, HAL.
    • Handle: RePEc:hal:journl:hal-03844012
    DOI: 10.1007/s11142-022-09733-w
    Note: View the original document on HAL open archive server: https://hal.science/hal-03844012v3
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