Forecasting Earnings from Home
We examine the impact of working from home (WFH) practices on the financial services industry, focusing on sell-side equity analysts. We find that analysts who previously benefited from access to in-person interactions with other informed parties experience a greater decline in earnings forecast accuracy following the COVID lockdown and the shift to WFH. Notably, the informational advantage associated with the in-person access disappears during the lockdown and returns once restrictions are lifted. Our results are stronger for all-star analysts and analysts with shorter coverage periods, suggesting that all-star analysts rely relatively more on access to in-person interactions prelockdown and that accumulated firm-specific knowledge mitigates the loss of in-person interactions. Our results remain robust across alternative analyst performance measures. We conclude that, despite recent advances in communications technology, AI, and machine learning, in-person interactions remain a unique and difficult to substitute information channel for sell-side research providers and that WFH impedes information flows between market participants in capital markets. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2024.04637 .
Authors
- Michael T. Durney (ORCID: https://orcid.org/0000-0001-6341-6466)
- Hoyoun Kyung (ORCID: https://orcid.org/0000-0002-1423-6714)
- Jihwon Park (ORCID: https://orcid.org/0000-0003-4663-6832)
- Stanimir Markov
Institutions
- University of Iowa (US)
- Baruch College (US)
- The University of Texas at Dallas (US)
- University of Missouri (US)
Publication Details
- Journal
- Management Science
- Published
- 2026-02-09
- DOI
- https://doi.org/10.1287/mnsc.2024.04637
- Primary Topic
- Auditing, Earnings Management, Governance
- Type
- article
- Field-Weighted Citation Impact
- 0.00