COMPETITIVE PARITY, STATUS DISPARITY, AND MUTUAL FORBEARANCE: SECURITIES ANALYSTS' COMPETITION FOR INVESTOR ATTENTION

TitleCOMPETITIVE PARITY, STATUS DISPARITY, AND MUTUAL FORBEARANCE: SECURITIES ANALYSTS' COMPETITION FOR INVESTOR ATTENTION
Publication TypeJournal Article
Year of Publication2014
AuthorsBowers A.H, Greve H.R, Mitsuhashi H., Baum J.AC
JournalAcademy of Management Journal
Volume57
Issue1
Pagination38-62
Date PublishedFeb
Type of ArticleArticle
ISBN Number0001-4273
Accession NumberWOS:000331959600003
Keywordscareer concerns, conflicts-of-interest, DYNAMICS, earnings forecasts, herding behavior, market, multimarket contact, recommendations, regulation fair disclosure, risk-taking
Abstract

Most studies of responses to change in competitive environments focus on competitor-specific adaptations. However, rivals are often acutely aware of one another, and this awareness should influence their competitive behavior. In this study, we focus on three market structures that affect competitive behavior: competitive parity, status disparity, and multipoint contact. In particular, we examine how securities analysts responded to a regulatory discontinuity, Regulation Fair Disclosure ("Reg-FD"), which promotes competitive parity by eliminating privileged access to proprietary firm information as a critical source of competitive advantage. We predict and find that Reg-FD activated mutual forbearance among analysts linked through multipoint contact. We also predict and find that high-status analysts forbear more strongly. Analysts' responses to heterogeneity in competitive advantage thus depend importantly on their competitive overlap and status, which has implications for both their behavior and the information they provide to investors.

DOI10.5465/amj.2011.0818