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Self-selection and the forecasting abilities of female equity analysts

journal contribution
posted on 2010-05-01, 00:00 authored by A Kumar
This paper investigates whether there are systematic differences between the forecasting style and abilities of female and male analysts, and whether market participants recognize these differences. My key conjecture is that only female analysts with superior forecasting abilities enter the profession due to a perception of discrimination in the analyst labor market. Consistent with this conjecture, I find that female analysts issue bolder and more accurate forecasts and their accuracy is higher in market segments in which their concentration is lower. Further, the stock market participants are aware of the male–female skill differences. They respond more strongly to the forecast revisions by female analysts even though those analysts get less media coverage. The short-term market reaction is incomplete, however, because it is followed by a strong post-revision drift. The perception of abilities is similar in the analyst labor market, where female analysts are more likely to move up to high-status brokerage firms, while their downward career mobility is lower. Collectively, these results indicate that female analysts have better-than-average skill due to self-selection and market participants are at least partially able to recognize their superior abilities.

History

Journal

Journal of accounting research

Volume

48

Pagination

393-435

Location

London, Eng.

ISSN

0021-8456

eISSN

1475-679X

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2009, University of Chicago on behalf of the Accounting Research Center

Issue

2

Publisher

Wiley-Blackwell