We investigate the analyst rankings of Institutional Investor (I/I) and The Wall Street Journal (WSJ) in 1994-2001. We find that investment recommendation performance is a significant determinant of the rankings. The positive effect of earnings forecast accuracy on the rankings documented in prior research is significant even after adjusting for a variety of other factors. However, other determinants that have a primary component of recognition are generally much more important. Compared to other analysts in the year after becoming stars: (1) the forecasts of I/I stars are significantly more accurate—but only by a modest amount, and those of WSJ stars are not different; (2) the recommendations of I/I stars perform nobetter and those of WSJ stars perform significantly worse. Further, the behavior of both I/I and WSJ stars is generally consistent with that predicted by herding theories on the basis of career concerns over continuing to be a star (e.g., taking less risk in investment recommendations).
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