Working Papers

3rd Round R&R at Contemporary Accounting Research

Abstract: Recent research on sell-side analysts emphasizes the centrality of social ties and social interactions to what they do. However, we know little about how analysts create or maintain relationships over both the short and long terms. We remedy that in this qualitative study by illustrating the micro level processes that analysts engage in as part of developing a network of relations around them. Starting from the premise that economic actions are embedded in social relations and drawing on interviews with analysts, fund managers and investor relations officers in China, we show how analysts forge both weak and strong social ties to create an infrastructure of social networks to fulfill relational demands. We also demonstrate how personal and professional boundaries blur in the process of building and maintaining the social infrastructure in ways that are consistent with the cultural phenomenon of guanxi. We further show how this social infrastructure facilitates information flow and influences actors’ decision-making. Our study suggests that, through the social infrastructure, sell-side analysts reduce the costs of identifying, maintaining, and leveraging social ties for investors and other actors in capital markets. This perspective broadens our understanding of sell-side analysts as social, rather than solely information, intermediaries. Additionally, we show how the social ties that analysts forge with institutional investors accrete into a social infrastructure that not only enables sell-side analysts to effectively function as intermediaries but also constrains those who fall short of its rules, entrenching existing social and informational asymmetries. Overall, we contribute to conceptualizations of sell-side analysts by demonstrating how they build the social infrastructure that is foundational to information intermediation.

Abstract: This paper investigates the gender effect on sell-side analysts' social interactions with company management and examines the mechanisms behind gender differences. Using a unique dataset of corporate site visits conducted by sell-side analysts, we find that female analysts undertake less frequent corporate site visits and are granted less access to listed firms than their male counterparts. However, they initiate more site visits for each firm they can access. Moreover, site visits involving female analysts elicit weaker abnormal returns, reflecting a bias against the inclusion of female analysts in economically significant interactions. We further examine three potential mechanisms behind gender differences in corporate site visits: the uneven distribution of resources within predominantly male financial institutions, societal expectations related to gender roles, and gender homophily in financial social networks. Results suggest that these three social and organizational mechanisms form barriers hindering female analysts from gaining equal access to social interactions in capital markets. Our findings contribute to both the literature on gender issues in capital markets and burgeoning research on the significance of social interactions in the investment chain. This study calls for the creation of a more inclusive environment that supports not only equal access to information but also equal access to social interactions for female financial professionals.

Abstract: The emergence of social media as a corporate disclosure channel and investor communication medium has led to significant changes in the dissemination and exchange of corporate information. Despite a growing body of literature investigating its impact on firm disclosure and investment decisions, the effects of social media on sell-side analyst profession remain largely unexplored. Drawing from Bourdieu’s field and habitus concepts, this study conducts exploratory qualitative field study to investigate how social media alters the field and essence of analyst work. Choosing WeChat as the empirical site, we find that social media, as an infrastructure of communications and social networks in stock markets, has significantly changed the field that sell-side analysts operate in and the position that sell-side analysts take. The field changes largely improve sell-side analysts’ accessibility but reduces their visibility, challenging sell-side analysts’ authority of disseminating corporate narratives and brokering social interactions. In response to the field changes, sell-side analysts take proactive strategies in the virtual place and strive to leverage social media technology. However, these lead to much increased workloads and potentially affects the quality of their work.