Thomas Bourveau, Alexandre Garel, Peter Joos, Arthur Petit-Romec
We construct a distraction measure based on extreme industry returns to gauge whether analysts’ attention is away from certain stocks under coverage. We find that temporarily distracted analysts make less accurate forecasts, revise forecasts less frequently, and publish less informative forecast revisions, relative to undistracted 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. © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022.
Columbia University, New York, NY, United States; Audencia Business School, Nantes, France; INSEAD, Singapore, Singapore; TBS Education, Toulouse, France
