The Boss Knows Best: Directors of Research and Subordinate Analysts

Author:

Bradley Daniel,Gokkaya SinanORCID,Liu XiORCID

Abstract

Research departments are managed by directors of research (DORs). Subordinate analysts working for higher-quality DORs provide superior earnings forecasts that elicit stronger market reactions, provide better investment recommendations, and have better career outcomes. For the broker, higher-quality DORs drive more trading commissions. Economically, analysts benefit the most from DOR–analyst industry alignment resulting from DORs’ former analyst experience. We provide several tests to mitigate endogeneity concerns and explore various mechanisms to explain these results. Overall, our article identifies a unique channel whereby the industry-specific and general human capital of top management filters through to individual subordinates and consequently improves organizational performance.

Publisher

Cambridge University Press (CUP)

Subject

Economics and Econometrics,Finance,Accounting

Cited by 5 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Intrafirm Knowledge Sharing in the Investment Research Industry;Management Science;2023-06-01

2. Cross-industry information sharing among colleagues and analyst research;Journal of Accounting and Economics;2022-08

3. Personal Financial Distress, Limited Attention;Journal of Accounting Research;2021-12

4. Does it pay to be socially connected with wall street brokerages? Evidence from cost of equity;Journal of Corporate Finance;2021-06

5. Happy analysts;Accounting, Organizations and Society;2021-04

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