Analyst Skill and Firm Characteristics : Global Perspectives

We address whether analyst skill is a persistent characteristic, and the extent to which skill is associated with characteristics of the brokerage firm employing the analyst. In particular, we examine analysts' ability to publish accurate earnings estimates consistently. We look globally with a focus on the United States and Japan, and find that this ability is persistent in all regions. Secondly, we find that analyst estimate accuracy is in part associated with the size of the firm employing the analyst; the home country of the firm, in the case of Japanese stocks; and underwriting affiliations of the firm employing the analyst, in the case of U.S. stocks. Finally, we demonstrate how these firm characteristics relate to the profitability of stock recommendations made by the analysts employed by firms of various types