Analyst Rational Inattention: Evidence from CEO Turnover Events

ABSTRACT We consider the dynamics of analyst inattention by investigating how analysts allocate their attention when a firm in their portfolio experiences CEO turnover. Our analysis shows that analysts tend to divert their attention toward firms that experience such events, resulting in less attention and a corresponding reduction in forecasting accuracy for nonevent firms. Furthermore, this reduction in accuracy varies with factors related to the costs and benefits of rationally allocating attention to firms that have experienced CEO turnover. Collectively, our analysis responds to the call for research on rational inattention among analysts and illustrates the specific intraportfolio events that alter attention allocation and information. JEL Classifications: G10; G11; G17; G14; M12; M40; M41.

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Publication Details

Journal
The Accounting Review
Published
2026-02-01
DOI
https://doi.org/10.2308/tar-2022-0684
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
0.00
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article

Analyst Rational Inattention: Evidence from CEO Turnover Events

Theodore H. Goodman, R. Thomas Godwin, R. Christopher Small
The Accounting Review
Auditing, Earnings Management, Governance
article

Analyst Rational Inattention: Evidence from CEO Turnover Events

Theodore H. Goodman, R. Thomas Godwin, R. Christopher Small
article en

Abstract

ABSTRACT We consider the dynamics of analyst inattention by investigating how analysts allocate their attention when a firm in their portfolio experiences CEO turnover. Our analysis shows that analysts tend to divert their attention toward firms that experience such events, resulting in less attention and a corresponding reduction in forecasting accuracy for nonevent firms. Furthermore, this reduction in accuracy varies with factors related to the costs and benefits of rationally allocating attention to firms that have experienced CEO turnover. Collectively, our analysis responds to the call for research on rational inattention among analysts and illustrates the specific intraportfolio events that alter attention allocation and information. JEL Classifications: G10; G11; G17; G14; M12; M40; M41.

The Accounting Review
Cornell University (US), Purdue University West Lafayette (US), University of Houston (US)
Openalex Percentile: Top 54%
Auditing, Earnings Management, Governance
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Analyst Rational Inattention: Evidence from CEO Turnover Events — Theodore H. Goodman, R. Thomas Godwin, et al. · The Accounting Review (2026) | TGRS Research Map | TGRS