Impact of Strategy on Analyst Information

In this paper, we investigate the impact of firm strategy on the properties of analyst\u27 information. We argue that analysts\u27 total information (common and idiosyncratic information together) about a firm depends on how clearly evident the chosen strategy of a firm is. Second, we argue that financial analysts will see more opportunities for value addition in differentiators, and hence, will gravitate more towards such firms. Analysts add value by gathering private information and, thus, individual analyst\u27s private information will be a greater percentage of total information for a firm pursuing a differentiation strategy than for a firm pursuing a cost leadership strategy. Our results confirm our hypotheses