The disincentive effect of stars : evidence from analyst coverage
We hypothesize that when the winning odds are eclipsed by the presence of superstars, tournament participants will choose to bow out of the competition. We use the setting of financial analysts to test this hypothesis. We document that nonstar analysts avoid direct competition with star analysts thr...
| Autors principals: | , , |
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| Format: | Journal Article |
| Idioma: | English |
| Publicat: |
2020
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| Accés en línia: | https://hdl.handle.net/10356/144126 |
| _version_ | 1826123216556392448 |
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| author | Luo, Jiang Yin, Huifang Zhang, Huai |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Luo, Jiang Yin, Huifang Zhang, Huai |
| author_sort | Luo, Jiang |
| collection | NTU |
| description | We hypothesize that when the winning odds are eclipsed by the presence of superstars, tournament participants will choose to bow out of the competition. We use the setting of financial analysts to test this hypothesis. We document that nonstar analysts avoid direct competition with star analysts through their coverage decisions. Moreover, nonstars’ reluctance to compete with stars is more pronounced when star analysts are more highly ranked, when winning the tournament carries higher rewards, when institutional ownership is lower, when the firm faces lower uncertainties, and when nonstars are of average ability. In addition, we show that nonstars who avoid direct competitions with stars are more likely to become an Institutional Investor All-star in the future, suggesting that competition avoidance benefits nonstars. Collectively, our results suggest that the presence of superstars discourages others from participating in the tournament. |
| first_indexed | 2024-10-01T06:01:01Z |
| format | Journal Article |
| id | ntu-10356/144126 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T06:01:01Z |
| publishDate | 2020 |
| record_format | dspace |
| spelling | ntu-10356/1441262023-05-19T07:31:18Z The disincentive effect of stars : evidence from analyst coverage Luo, Jiang Yin, Huifang Zhang, Huai Nanyang Business School Business::Finance Competition Financial Analyst Coverage We hypothesize that when the winning odds are eclipsed by the presence of superstars, tournament participants will choose to bow out of the competition. We use the setting of financial analysts to test this hypothesis. We document that nonstar analysts avoid direct competition with star analysts through their coverage decisions. Moreover, nonstars’ reluctance to compete with stars is more pronounced when star analysts are more highly ranked, when winning the tournament carries higher rewards, when institutional ownership is lower, when the firm faces lower uncertainties, and when nonstars are of average ability. In addition, we show that nonstars who avoid direct competitions with stars are more likely to become an Institutional Investor All-star in the future, suggesting that competition avoidance benefits nonstars. Collectively, our results suggest that the presence of superstars discourages others from participating in the tournament. Ministry of Education (MOE) Accepted version The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Zhang acknowledges the financial support from Singapore Ministry of Education for providing research funding (RG75/16 and RG163/17). Yin acknowledges the financial support from the National Natural Science Foundation of China (Grant Number: 71302076, 71502096, 71672106), from ‘‘Chenguang Program’’ supported by Shanghai Education Development Foundation and Shanghai Municipal Education Commission, and from the MOE project of Key Research Institute of Humanities and Social Science in University (No. 16JJD790037). 2020-10-14T05:28:01Z 2020-10-14T05:28:01Z 2019 Journal Article Luo, J., Yin, H., & Zhang, H. (2020). The disincentive effect of stars : evidence from analyst coverage. Journal of Accounting, Auditing and Finance, 35(4), 803-828. doi:10.1177/0148558x19832096 0148-558X https://hdl.handle.net/10356/144126 10.1177/0148558X19832096 2-s2.0-85062710245 4 35 803 828 en Journal of Accounting, Auditing and Finance © 2019 The Author(s). All rights reserved. This paper was published in Journal of Accounting, Auditing and Finance and is made available with permission of The Author(s). application/pdf |
| spellingShingle | Business::Finance Competition Financial Analyst Coverage Luo, Jiang Yin, Huifang Zhang, Huai The disincentive effect of stars : evidence from analyst coverage |
| title | The disincentive effect of stars : evidence from analyst coverage |
| title_full | The disincentive effect of stars : evidence from analyst coverage |
| title_fullStr | The disincentive effect of stars : evidence from analyst coverage |
| title_full_unstemmed | The disincentive effect of stars : evidence from analyst coverage |
| title_short | The disincentive effect of stars : evidence from analyst coverage |
| title_sort | disincentive effect of stars evidence from analyst coverage |
| topic | Business::Finance Competition Financial Analyst Coverage |
| url | https://hdl.handle.net/10356/144126 |
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