Melbourne Accounting Research Seminar - Professor Oliver Rui

Professor Oliver Rui from CEIBS presented a MARS seminar.

Topic: Analyst Team Diversity and Analyst Performance

Abstract: In this paper, we examine how diversity attributes affect team forecast performance. We find that diversity in general has a positive association with team forecast accuracy. This result is consistent with the idea that team members with different knowledge sets may pay attention to or extract different information about the same stock and thus achieve better performance than a single analyst. We also find that diversity has a negative impact on the timeliness of forecasts. This finding indicates that it takes time for a diversified team to reach an agreement. In addition, we find that diversity is negatively associated with the probability of becoming a star. This finding indicates that a homophilic environment enjoys the benefit of lowering communication cost and improving relationships between team members. Our further tests show that it is mainly cognitive diversity other than demographic diversity that affects team forecast performance.