Publications
Publications
- Journal of Accounting & Economics
Cultural Diversity on Wall Street: Evidence from Consensus Earnings Forecasts
By: Kenneth Merkley, Roni Michaely and Joseph Pacelli
Abstract
We examine how cultural differences among agents influence the aggregate outcome of a common forecasting task. Using both exogenous shocks to sell-side analyst diversity and panel regression methods, we find that increases in analyst cultural diversity positively affect the quality of the consensus earnings forecast. We further provide evidence on the potential mechanisms underlying this result by showing that cultural diversity is associated with improvements in individual analyst forecasts, greater analyst conference call participation and interaction, and greater diversity in analyst education backgrounds and professional interests. Overall, our results indicate that greater cultural differences among agents producing an aggregate forecast are associated with a higher quality consensus forecast.
Keywords
Culture; Forecasting; Sell-side Analysts; Information Aggregation; Diversity; Forecasting and Prediction; Information; Performance Improvement
Citation
Merkley, Kenneth, Roni Michaely, and Joseph Pacelli. "Cultural Diversity on Wall Street: Evidence from Consensus Earnings Forecasts." Journal of Accounting & Economics 70, no. 1 (August 2020).
About The Author
