Research

Whether the performance of teams is better than that of individuals is still an open question. In this paper I look at one important team in the financial market, the financial analyst team, and take the advantage of the exogenous shock introduced by stay-at-home orders in the United States during the COVID-19 pandemic, to investigate whether analyst teams can issue more timely forecasts compared to individual analysts. The main findings are: (i) after the stay-at-home orders, both team and individual analysts issue fewer timely forecasts; (ii) compared to individual analysts, team analysts can issue more timely forecasts after the stay-at-home orders; and (iii) teams with female leaders and higher diversity perform better. In summary, this paper provides new evidence on the performance difference between teams and individuals especially during tough times.

We examine how going public affects firms’ demands on inventor executives who own both management and innovation experience. Using IPO withdrawn firms as the control group and NASDAQ returns fluctuations as the instrumental variable on IPO competition, we show that firms demand more inventor executives after successful IPOs. We conjecture that firms demand those inventor executives who own superior abilities to better overcome threats and competitions after going IPOs. Empirical evidence supports this idea. The demand is higher for firms with higher product market competition and innovation competition. In addition, the number of inventor executives is positively related to survival probability after IPOs, stock market performance, operating performance, and innovation performance. Our results provide new evidence on the effect of going public on human capital mobility from firms’ demand perspective.

I examine whether and how homophily affects executives and analysts interactions in conference calls. Using earnings conference calls of S&P 1500 firms, I find robust evidence that executive behavior is driven by homophily: they are more likely to select the same ethnic background analysts to ask questions in the conference call. This positive relation is still held by exploiting the exogenous shock to analysts’ attention and the event of CEO turnover. Moreover, executives communicate more and speak with a more positive tone to the same ethnic group analysts in the Q&A session. Such a homophily behavior of information communication has consequences to the analysts forecast quality: their forecast errors become smaller. In summary, my findings suggest that homophily does exist in the financial market and can affect the interactions of different economic agents in the financial market.