Analysts' Cultural Long-Term Orientation and Their Information Production

We study how analysts’ inherited cultural attitudes to time orientation affect their production of long-term information and the profitability of their stock recommendations. We find that analysts from long-term oriented cultures exhibit a longer forecast horizon and issue more long-term forecasts. They also produce more accurate long-term forecasts and ask more long-term focused questions during conference calls, eliciting greater long-term disclosure from managers. In addition, they are more likely to use discounted valuation models that explicitly incorporate expectations about firms’ long-term prospects. Their stock recommendations are more profitable, consistent with their production of long-term information enhancing valuation. Our findings highlight the role of cultural long-term orientation in shaping analysts’ information production in capital markets.