Working Papers

Around the Clock: Sleep Deprivation and Financial Analysts' Performance

Issues pertaining to the grueling working hours and resultant sleep deprivation of financial professionals have received increasing attention from regulatory bodies and the public. Using an innovative dataset sourced from PDF time stamps, this study constructs a novel measure to identify the occurrence and degree of sleep deprivation among individual financial analysts. I next examine whether analysts’ sleep deprivation affects their job performance and find that sleep loss is significantly associated with diminished job performance. I then revisit the “protected-weekend” policy in the investment banks and find the policy exacerbates the sleep problem and impairs the performance of analysts with ex-ante severe sleep deficits.

Financial Analysts and Forced CEO Departures

Learning is an effective way for financial analysts to improve their performance. In this paper, we investigate analysts' learning behavior and its spillover effect following forced CEO departures (FCDs). Our study shows that analysts who correct their past optimism for FCD firms (i.e. learning) also tend to issue less optimistic earnings forecasts for the unaffected firms in their portfolios (i.e. overcorrection). Specifically, we find that the decrease in their optimism is larger for analysts who have less experience, were previously overly optimistic, cover firms with worse information environments, and have a heavy workload. Furthermore, we find these analysts' forecasts following FCDs are also more accurate and generate stronger market reactions. Overall, our findings suggest that analysts learn from FCD events by issuing less optimistic forecasts and benefit from the corresponding spillover effect for the unaffected firms.

Firms' Disclosure Timing Decisions in the Supply Chain

In this paper, we investigate how firms make voluntary disclosure timing decisions in the context of the supply chain. We find that firms tend to coordinate with their supply chain partners by not issuing guidance before, but not after, the earnings announcements for partners with greater bargaining power. Our results suggest that firms internalize the spillover effect of disclosures to avoid preempting attention from larger partners, which is consistent with attention competition theory. We then demonstrated that the impact of relative bargaining power is more prominent for supply chain pairs with stronger connections and partners with more proprietary information, but less prominent for partners with poor financial performance and high uncertainty. Overall, our findings shed light on the strategy and underlying mechanism of firms' disclosure timing decisions in the presence of supply chain partners.

Work in Progress
Talent Mobility and Effort (Re)allocation in Equity Research Analyst Teams
Teamwork is the fundamental way research activity is organized in brokerage firms. Using author information in analyst reports, we construct the personnel composition of equity research teams and track the job hopping of individual analysts across teams. We hypothesize and find that both previous and current teams allocate more effort to firms that experience higher performance declines after job hopping. We also hypothesize and find that previous (current) teams tend to terminate (initiate) coverage earlier for firms experiencing higher performance declines. Overall, our study sheds light on the effort allocation strategy of equity research teams in the context of talent mobility.

Analysts' coverage on SPACs