NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Hongping Tan

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October 2005Do Local Analysts Know More? A Cross-Country Study of the Performance of Local Analysts and Foreign Analysts
with Kee-Hong Bae, Rene M. Stulz: w11697
This paper examines whether analysts resident in a country make more precise earnings forecasts for firms in that country than analysts who are not resident in that country. Using a sample of 32 countries, we find that there is an economically and statistically significant analyst local advantage even after controlling for firm and analyst characteristics. The importance of the local advantage is inversely related to the quality of the information provided by firms. In particular, the local advantage is high in countries where earnings are smoothed more, less information is disclosed by firms, and firm idiosyncratic information explains a smaller fraction of stock returns. The local advantage is also negatively related to market participation by foreign investors and by institutions and po...

Published: Bae, Kee-Hong, Rene M. Stulz, and Hongping Tan. "Do local analysts know more? A cross-country study of performance of local analysts and foreign analysts." Journal of Financial Economics 88, 3 (2008): 581-606. citation courtesy of

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