How do experienced analysts improve price efficiency? *

AC Akyol (First Author), YM Qian (Participant Author), F Yu (Participant Author)

Research output: Contribution to journalJournal

1 Citation (Web of Science)


We document that return anomalies related to management discretions are mitigated for firms followed by more experienced analysts. Nonetheless, only experience directly covering the firm matters while experience covering other firms is not associated with greater price efficiency. Focusing on the accrual anomaly, we then examine research and monitoring as possible channels through which experience mitigates mispricing. For firms followed by more experienced analysts, we find that forecast revisions and stock prices respond more positively to the accrual component of earnings. We further find that accrual quality is higher in firms followed by more experienced analysts, which holds after using both propensity score matching and exogenous events of brokerage closures and mergers to control for endogeneity. Collectively, our results are consistent with monitoring being the primary mechanism by which experienced analysts reduce accrual mispricing.
Original languageEnglish
Article number106798
Number of pages20
JournalJournal of Banking and Finance
Publication statusPublished - Apr 2023

Corresponding author email


  • Accrual anomaly
  • Accrual quality
  • Experience
  • Financial analysts

Indexed by

  • ABDC-A*
  • SSCI


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