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Frédéric Sonney, Financial Analysts' Performance: Sector Versus Country Specialization, The Review of Financial Studies, Volume 22, Issue 5, May 2009, Pages 2087–2131, https://doi.org/10.1093/rfs/hhm024
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Abstract
Brokerage houses normally structure their research activities along either country or sector lines. I investigate whether organizational structure affects the quality of financial analysts' earnings forecasts. Specifically, I compare the performance of country-specialized financial analysts with that of sector-specialized financial analysts. The former issue forecasts considerably more accurately than the latter. Country specialists benefit from an informational advantage over sector specialists. A superior knowledge of country-specific factors, as well as geographical proximity between analysts and the firms they cover, are significant determinants of this advantage.