A Star Is Born: The Relationship Between Performance and Achieving Status Through Certification Contests in the Context of Equity Analysts Academic Article uri icon

abstract

  • We investigate how the relationship between status and performance decouples over time by addressing two questions: (1) how performance affects the likelihood that an actor achieves high status and (2) how achieving high status affects the actors subsequent performance. In doing so, we focus on the role repeated certification contests play, where evaluators assess actors performance along particular dimensions and confer high status on the contest winners. Using the context of sell-side (brokerage) equity analysts and the All-Star list from Institutional Investor magazine, we first investigate whether analysts who make the All-Star list are more likely to produce accurate and/or independent forecasts. Then, we investigate analyst performance after recent and multiple wins. Our results demonstrate the decoupling of status and performance over time and the roles played by both the high-status actor and the social evaluators conferring their status. Whereas analyst performance increases the likelihood of being designated an All-Star, recent and multiple All-Star designations differentially affect both how subsequent performance is assessed, and how the All-Star analysts subsequently perform. In the short term, achieving high status can increase performance and solidify an analysts status position; however, in the long term, it can lead to lower performance and eventually result in status loss, which further erodes performance.

published proceedings

  • Organization Science

author list (cited authors)

  • Paik, E. T., Pollock, T. G., Boivie, S., Lange, D., & Lee, P. M

publication date

  • January 1, 2022 11:11 AM