Title

Analyst following along the supply chain

Document Type

Journal article

Source Publication

Review of Accounting Studies

Publication Date

3-2015

Volume

20

Issue

1

First Page

210

Last Page

214

Publisher

Springer New York LLC

Keywords

Supply chain, Information transfers, Analyst following, Forecast revisions, Forecast accuracy, Customer momentum

Abstract

We document that the likelihood of an analyst following a supplier–customer firm pair increases with the strength of the economic ties along the supply chain, as measured by the percentage of the supplier’s sales to the customer. Analysts who follow a covered firm’s customer provide more accurate earnings forecasts for the supplier firm than analysts who do not. While both types of analysts respond to and incorporate the earnings news from the customer firm into their revisions of the supplier’s earnings forecasts, supplier–customer analysts exhibit a larger improvement in their forecast accuracy for the supplier subsequent to the customer’s earnings announcements, when compared to other analysts. Overall, the evidence suggests that supplier–customer analysts benefit from the informational complementarities along the supply chain and improve their forecast accuracy as a result.

DOI

10.1007/s11142-014-9295-6

Print ISSN

13806653

E-ISSN

15737136

Funding Information

Guan and Zhang acknowledge research start-up grants from the City University of Hong Kong and their research assistant Sophie Zhou. Wong appreciates financial support from the CMA Professorship in Accounting and the Social Sciences and Humanities Research Council of Canada.

Publisher Statement

Copyright © Springer Science+Business Media New York 2014. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Guan, Y., Wong, M.H.F. & Zhang, Y. (2015). Analyst following along the supply chain. Review of Accounting Studies, 20, 210-214. doi: 10.1007/s11142-014-9295-6