Article | Journal of Finance | April 2005

The Geography of Equity Analysis

by Christopher J. Malloy


I provide evidence that geographically proximate analysts are more accurate than other analysts. Stock returns immediately surrounding forecast revisions suggest that local analysts impact prices more than other analysts. These effects are strongest for firms located in small cities and remote areas. Collectively these results suggest that geographically proximate analysts possess an information advantage over other analysts, and that this advantage translates into better performance. The well-documented underwriter affiliation bias in stock recommendations is concentrated among distant affiliated analysts; recommendations by local affiliated analysts are unbiased. This finding reveals a geographic component to the agency problems in the industry.

Keywords: Geographic Location; Stocks; Investment Return; Forecasting and Prediction; Price; Performance; Equity; Information; Prejudice and Bias; Agency Theory;


Malloy, Christopher J. "The Geography of Equity Analysis." Journal of Finance 60, no. 2 (April 2005): 719–755. (

Nominated for Smith Breeden Prize. Best Paper For the best finance research paper published in the Journal of Finance presented by Smith Breeden Associates, Inc.​