Do local analysts know more?
Subtitle: a cross-country study of the performance of local analysts and foreign analysts
By: Kee-Hong Bae, Rene M. Stulz, Hongping Tan.
Contributors: Stulz, René M.; Tan, Hongping.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11697; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11697.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investment analysis.
Description: "This paper examines whether analysts resident in a country make more precise earnings forecasts for firms in that country than analysts who are not resident in that country.  Using a sample of 32 countries, we find that there is an economically and statistically significant analyst local advantage even after controlling for firm and analyst characteristics.  The importance of the local advantage is inversely related to the quality of the information provided by firms.  In particular, the local advantage is high in countries where earnings are smoothed more, less information is disclosed by firms, and firm idiosyncratic information explains a smaller fraction of stock returns.  The local advantage is also negatively related to market participation by foreign investors and by institutions and positively related to holdings by insiders.  U.S.  investors underweight a country's stocks more in their portfolios if that country has a higher analyst local advantage"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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