Concurrent Earnings Announcements and Analysts’ Information Production

We examine whether financial analysts—sophisticated market participants—are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to issue timely earnings forecasts for the sample firm's subsequent quarter than analysts without a concurrent announcement. The likelihood of timely forecasts decreases monotonically and significantly as an analyst's number of concurrent announcements increases. Among the analysts who are able to issue timely earnings forecasts, the thoroughness of their work (measured by the number of forecasts for longer-horizon earnings and earnings components that accompany the earnings forecast) decreases monotonically and significantly as their number of concurrent announcements increases. In addition, analysts are more sluggish in providing stock recommendations and less likely to ask questions in earnings conference calls as their number of concurrent announcements increases. Moreover, we find that when analysts face concurrent announcements, they tend to allocate their limited attention to firms that already have rich information environments, leaving behind firms in need of attention. We also find some evidence of slower price discovery when a larger percentage of a firm's analysts have concurrent announcements