HSU, CHARLES, Li, Xi, Ma, Zhiming and Philips, Gordon "Does Industry Competition Influence Analyst-level Coverage Decisions and Career Outcomes?" Journal of Financial and Quantitative Analysis, Vol. 58, No. 2, Mar, 2023, pp. 711-745.
We analyze whether industry competition influences analyst coverage decisions and whether analysts benefit from covering product market competitors. We find that analysts are more likely to cover a firm when this firm competes with more firms already covered by the analyst. We also find that the intensity of competition among these competitors is additionally important to the coverage decision. Moreover, we find that analysts who cover product market competitors are more likely to obtain analyst star status. These results are consistent with the importance to analysts of industry competition and product market knowledge accumulated through covering product market competitors.