Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • Article
  • Journal of Accounting & Economics

Cultural Diversity on Wall Street: Evidence from Consensus Earnings Forecasts

By: Kenneth Merkley, Roni Michaely and Joseph Pacelli
  • Format:Print
ShareBar

Abstract

We examine how cultural differences among agents influence the aggregate outcome of a common forecasting task. Using both exogenous shocks to sell-side analyst diversity and panel regression methods, we find that increases in analyst cultural diversity positively affect the quality of the consensus earnings forecast. We further provide evidence on the potential mechanisms underlying this result by showing that cultural diversity is associated with improvements in individual analyst forecasts, greater analyst conference call participation and interaction, and greater diversity in analyst education backgrounds and professional interests. Overall, our results indicate that greater cultural differences among agents producing an aggregate forecast are associated with a higher quality consensus forecast.

Keywords

Culture; Forecasting; Sell-side Analysts; Information Aggregation; Diversity; Forecasting and Prediction; Information; Performance Improvement

Citation

Merkley, Kenneth, Roni Michaely, and Joseph Pacelli. "Cultural Diversity on Wall Street: Evidence from Consensus Earnings Forecasts." Journal of Accounting & Economics 70, no. 1 (August 2020).
  • Find it at Harvard
  • Read Now

About The Author

Joseph Pacelli

Accounting and Management
→More Publications

More from the Authors

    • 2021
    • Faculty Research

    Do Job Seekers Value Diversity Information? Evidence from a Field Experiment

    By: Joseph Pacelli, Jung Ho Choi, Kristina M. Rennekamp and Sorabh Tomar
    • 2021
    • Faculty Research

    Dirty Money: How Banks Influence Financial Crime

    By: Joseph Pacelli, Janet Gao, Jan Schneemeier and Yufeng Wu
    • June 2021
    • Management Science

    Does the Freedom of Information Act Foil the Securities and Exchange Commission's Intent to Keep Investigations Confidential?

    By: Braiden Coleman, Kenneth Merkley, Brian Miller and Joseph Pacelli
More from the Authors
  • Do Job Seekers Value Diversity Information? Evidence from a Field Experiment By: Joseph Pacelli, Jung Ho Choi, Kristina M. Rennekamp and Sorabh Tomar
  • Dirty Money: How Banks Influence Financial Crime By: Joseph Pacelli, Janet Gao, Jan Schneemeier and Yufeng Wu
  • Does the Freedom of Information Act Foil the Securities and Exchange Commission's Intent to Keep Investigations Confidential? By: Braiden Coleman, Kenneth Merkley, Brian Miller and Joseph Pacelli
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College