• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
 
 
Antecedents and Consequences of Financial Analyst Turnover
Emad MohdAccounting and Financial Management ServicesMGD-317DeGroote School of BusinessMcMaster University1280 Main Street WestHamilton, Ontario L8S 4M4CanadaE-mail:mohde@mcmaster.ca Tel: 905-525-9140 ext. 27432Siva NathanAssociate ProfessorSchool of AccountancyRobinson College of BusinessGeorgia State UniversityAtlanta, GA 30303-3083E-mail:snathan@gsu.edu Tel: 404-651-4455January 2005We thank Institutional Brokers Estimate System (I/B/E/S), which is a service of ThomsonFinancial, Inc. for providing us the financial analysts’ earnings forecasts data. The data has beenprovided as part of a broad academic program to encourage earnings expectations research. Wethank workshop participants at Georgia State University and Emory University for theircomments. We thank Rodger Griffeth and Julie Hotchkiss for their comments and their insightsinto the management and labor economics literature on employee turnover. We also thank LarryBrown, George Benston and Paul Simko for their comments. The second author visited theGoizueta Business School at Emory University while preparing the first draft of this paper.
 
 1
 
Antecedents and Consequences of Financial Analyst Turnover
AbstractWe examine the factors leading to turnover among sell-side financial analysts and theconsequences of turnover. We distinguish between two types of turnover, voluntary andinvoluntary. We define voluntary (involuntary) when analysts leave their employment at onebrokerage firm and find (do not find) employment at another brokerage firm. We examine theanalyst and brokerage firm specific factors leading to analyst turnover, separately for voluntaryand involuntary turnovers. We find that job performance is positively (negatively) related tovoluntary (involuntary). This finding is consistent with Jackofsky’s (1984) theory predicting acurvilinear U-shaped relationship between performance and turnover. For voluntary turnover,we examine analysts’ performance and job conditions at the new brokerage firm and relate theseto the factors leading to turnover. We find that these analysts move to larger brokerage firms andbecome more accurate. They have lighter workload at the new brokerage firm as they followfewer firms and industries. Our results suggest that good (bad) performance is rewarded(punished), where more accurate analysts move to larger brokerage houses and have lighterworkload and less accurate analysts leave the profession.
 
 2
Antecedents and Consequences of Financial Analyst Turnover1. Introduction
This study examines the factors leading to turnover among sell-side financial analysts andthe consequences of turnover. We distinguish between two types of turnover, voluntary andinvoluntary. We define voluntary turnover when analysts leave their employment at onebrokerage firm and find employment at another brokerage firm. When analysts leave theiremployment at one brokerage firm and are not employed at another brokerage firm covered byI/B/E/S, we define this turnover as involuntary. Using the management and labor economicsliteratures, we examine the analyst and brokerage firm specific factors leading to analystturnover, separately for voluntary and involuntary turnovers. Moreover, we examine analysts’performance and job conditions at the new brokerage firm and relate these to the factors leadingto turnover.This study adds to the extensive management and labor economics literatures onemployee turnover, focusing specifically on the sell-side financial analyst profession whoseturnover characteristics have not been extensively studied. Most of the empirical studies onemployee turnover in other professions use survey data, while we examine whether the existingemployee turnover theories hold for the analyst profession using archival empirical data. Whilesome studies have used archival data to examine analyst turnover (e.g., Hong and Kubik 2003;Mikhail et al. 1999), we provide a more extensive analysis of the relation between factors relatedto analyst performance and turnover. Additionally, our study is the first to examine analysts’performance after turnover.
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...