Who's Heard on the Street? Determinants and Consequences of Financial Analyst Coverage in the Business Press

Abstract

This study examines the determinants of financial analyst coverage in the business press and the effects of such coverage on analysts’ careers. Using a sample of business press articles that quote a financial analyst, we compare each cited analyst with the other analysts who were actively following the same firm and could have been cited by the reporter, but were not. In general, we find that analysts quoted in the business press are more likely to possess characteristics that prior research has found to be positively associated with analyst quality, and that higher quality analysts are allotted more space in the articles. However, we cannot rule out the possibility that at least some of our analyst quality measures capture the effects of familiarity. After controlling for analyst quality and article tone, we find that analysts with unfavorable stock recommendations are more likely to be cited than analysts with favorable recommendations. We provide evidence of significant career benefits for analysts who receive publicity in the business press, which suggests that the business press is a source of valuable exposure for analysts.

Keywords: financial analysts, business press, analyst career outcomes, capital markets

JEL Classification: G10, G24, J30, M41