Garcia, Nicolas

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Analyzing M&A: The Effects of Same Sell-Side Analysts
(2020-01-01) Garcia, Nicolas
This thesis explores the topic of earnings forecast accuracy within the context of M&A activity and expands upon the findings of Tehranian, Zhao, and Zhu (2014). The paper aims to provide insights into the contributing factors of equity research forecast accuracy by examining the cross-sectional deviation in the relationships that influence analysts’ ability to produce accurate earnings forecasts. The research conducted in this paper shows that equity research analysts who have prior experience covering both the target and the acquirer firm are more precise than analysts who covered just one of the two and new coverage analysts. The paper also identifies that among analysts who covered both the acquirer and target companies time spent covering companies in the same industry as the acquirer further improves forecast accuracy. The paper also finds that more forecast history for the target and acquirer companies in general results in slightly less accurate forecasts for analysts who have covered both the target and acquirer in the past.