Seminar by Li Yao

Piano Terra, Palazzo Levi Cases, Via del Santo 33 - ore 11.00 Aula LIM

29.05.2018

Seminar by Li Yao, Concordia University

Title: “Analysts’ Technological Expertise” (co-authored by Hongping Tan and Jin Wang)

Abstract: Using patent distribution across different technology classes, we construct technological expertise for each analyst-firm pair based on the technological proximity between the firm and other firms covered by the analyst. We find that technological expertise increases the likelihood and timeliness for an analyst to cover a firm. It also increases earnings forecast accuracy and stock recommendation profitability, especially for firms that rely more on technological innovation. Further analysis shows that technological expertise is distinct from industry specialization, and technological expertise could substitute industry specialization in analysts’ coverage choices. Our findings suggest that technological expertise is a crucial component of analysts’ knowledge base, which has large impact on their coverage decisions and forecast performance.