Seeing is believing: analysts’ corporate site visits

This study examines the impact of corporate site visits on analysts’ forecast accuracy based on a sample of such visits to Chinese listed firms during 2009–2012. We find that analysts who conduct visits (“visiting analysts”) have a greater increase in forecast accuracy than other analysts. Consisten...

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Bibliographic Details
Published in:Review of accounting studies 2016-12, Vol.21 (4), p.1245-1286
Main Authors: Cheng, Qiang, Du, Fei, Wang, Xin, Wang, Yutao
Format: Article
Language:English
Subjects:
Accounting
Accounting firms
Accounting/Auditing
Accuracy
Analysis
Analysts
Annual reports
Business and Management
Corporate Finance
Disclosure
Information
Investments
Organization theory
Public Finance
Research design
Studies
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Description
Summary:This study examines the impact of corporate site visits on analysts’ forecast accuracy based on a sample of such visits to Chinese listed firms during 2009–2012. We find that analysts who conduct visits (“visiting analysts”) have a greater increase in forecast accuracy than other analysts. Consistent with the notion that site visits facilitate analysts’ information acquisition through observing firms’ operations, we find that the results are stronger for manufacturing firms, firms with more tangible assets, and firms with more concentrated business lines. Moreover, we find that the effect of a site visit is greater when the site visit is an analyst-only visit, when the current visit is preceded by fewer visits, and when visiting analysts are based far from the visited firms. Furthermore, we find that site visits partially mitigate nonlocal analysts’ information disadvantage. Collectively, these results indicate that site visits are an important information acquisition activity for analysts.
ISSN:1380-6653
1573-7136
DOI:10.1007/s11142-016-9368-9