The main purpose of this paper is to analyze the time patterns of individual analysts' relative accuracy ranking in earnings forecasts using a Markov chain model. Two levels of stochastic persistence are found in analysts' relative accuracy over time. Factors underlying analysts' performance persistence are identified and they include analyst's length of experience, workload, and the size and growth rate of firms followed by the analyst. The strength and the composition of these factors are found to vary markedly in different industries. The findings support the general notion that analysts are heterogeneous in their accuracy in earnings forecasts and that their superior/inferior performance tends to persist over time. An analysis based on a refined measure of analysts' forecast accuracy ranking that strips off firm-specific factors further enhances the empirical validity of the findings. These findings provide a concrete basis for researchers to further explore why and how analysts perform differently in the competitive market of investment information services.

This study analyzes key financial ratios’ variations and helps us understand company financial performance on both high-tech and non-high-tech companies before and after the impact of the high-tech bubble. The composite index of the ranked profitability, assets utilization, liquidity, debt utilization, price to earnings, and market to book value are generated by company level first. The price ratios of high-tech and non-high tech companies are evaluated by a non-linear regression method for the periods before and after the bubble. The outcomes of various ratios are tested by statistical significance for each industry in these time periods. The results show that the high-tech companies have reached a higher efficiency level and the nonhigh-tech companies have suffered relatively more on profitability level after the high-tech bubble. A significantly lowered return on equity indicates that the high-tech companies have reduced their product unit cost and profit margins. As for the effect of the size of the company, the large high-tech companies have weakened the profit gaining power, but the small high-tech companies have remained profitable after the effect.

Purpose The purpose of this paper is to examine the impact of post-trade transparency on price efficiency and price discovery. Design/methodology/approach The authors use an exogeneous change in market transparency in the Taiwan Stock Exchange that mandates the disclosure of unexecuted orders of the five best bid and ask prices after each trade, and conduct an event study analysis. Findings After the change, price efficiency enhances for both large and small firms, although the impact on stock prices is greater when the firm is larger. The authors also find that post-change trading reveals more private information for large firms but more public information for small firms. The findings support the view that transparency has a positive impact on market quality. Originality/value The paper adds to a large body of literature investigating the relationship between transparency and market behavior, especially the ongoing debate about whether trading transparency positively affects price dynamics. The findings also have important policy implications for the regulators.

No abstract

PurposeThe purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.Design/methodology/approachThis paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.FindingsThe results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned firms.Practical implicationsFrom a regulatory perspective, common ownership in younger firms that rely heavily on R&D investment to produce innovation outputs is detrimental and needs to be regulated. However, common ownership in mature firms, which hold a big pool of patents or rely on acquiring patents to compete, is of less concern because of the protective role detected.Originality/valueThe paper provides a first comprehensive look into how same-industry common ownership affects innovation input, innovation output and postgrant patents. The research also reconciles the anticompetitive effect and the coordinative effect of common ownership documented in the literature.