Antecedents and consequences of financial analyst turnover

The purpose of this paper is to examine the factors leading to turnover among sell‐side financial analysts and the consequences of turnover.

The paper identifies two types of turnover, voluntary and involuntary, and defines voluntary (involuntary) as when analysts leave their employment at one brokerage firm and find (do not find) employment at another brokerage firm. Logistic models are estimated relating the probability of turnover to factors that explain turnover for both voluntary and involuntary turnover.

The paper finds that job performance is positively (negatively) related to voluntary (involuntary) turnover. This finding is consistent with Jackofsky's theory predicting U‐shaped relationship between performance and turnover. For voluntary turnover, analysts' performance and job conditions at the new brokerage firm are examined and related to the factors leading to turnover. It was found that turnover analysts move to smaller brokerage firms and become more accurate. They have lighter workload and enjoy more prestige at the new brokerage firm as they follow larger firms and fewer firms and industries.

This is the first study to apply Jackofsky's theory to the financial analysts' profession. Also, it is the first study to document the consequences to voluntary analyst turnover.