Does Crowdsourced Research Discipline Sell-Side Analysts?
Publication Date
2-13-2017
Abstract
We examine whether increased competition stemming from technological innovation disciplines sell-side analysts. We document a decline in short-term forecast bias for firms added to Estimize, an open platform that crowdsources short-term earnings forecasts, relative to matched control firms; this decline is greater when (1) existing sell-side competition is smaller, (2) earnings uncertainty is higher, and (3) Estimize coverage is less biased and more accurate. We also document an increase in short-term forecast accuracy and representativeness. Finally, we find no change in bias for longer-horizon forecasts or recommendations, suggesting competition from Estimize rather than broad economic forces drives our results.
Document Type
Article
Keywords
forecast bias, analyst conflict of interests, crowdsourcing, competition
Disciplines
Accounting
DOI
10.2139/ssrn.2915817
Source
SMU Cox: Accounting (Topic)
Language
English
