Title

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

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