| Summary: | We investigate how a firm’s positioning relative to category exemplars shapes security analysts’
evaluations. Employing a two-stage model of evaluation (initial screening and subsequent assessment),
we propose that exemplar similarity enhances a firm’s recognizability and legitimacy, increasing the
likelihood that it passes the initial screening stage and attracts analyst coverage. However, exemplar
similarity may also prompt unfavorable comparisons with exemplar firms, leading to lower analyst
recommendations in the assessment stage. We further argue that category coherence, distinctiveness, and
exemplar typicality influence the impact of exemplar similarity on firm evaluation. Leveraging Natural
Language Processing (NLP) techniques to analyze a sample of 7,603 US public firms from 1997 to 2022,
we find robust support for our predictions. By highlighting the intricate role of strategic positioning vis-àvis category exemplars in shaping audience evaluations, our findings have important implications for
research on positioning relative to category exemplars, category viability, optimal distinctiveness and
security analysts.
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