City Location and Sell-Side Analyst Research
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[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] I find that analysts' earnings forecasts are more accurate and the stock market reaction to analyst reports is stronger when the analyst is located in a city with higher human capital. Human capital is proxied for as the average education-level in the city. These results are consistent with prior theoretical and empirical research in the urban economics literature that links a higher average education of a city's work force with externalities and knowledge spillovers that increase productivity. These findings contribute to the literature investigating the effect of geography on information flows and analyst performance by expanding the discussion to the attributes of particular geographic locations.
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