Abstract:
We examine how geographically dispersed subsidiary information affects a firm’s information environment, exploiting pandemic lockdowns that limited analyst access to local subsidiaries. Linking analysts to nearby subsidiaries, we show that constrained local access reduces individual forecast errors and weakens reliance on salient but non-representative subsidiary signals, without altering fundamentals. This reallocation of attention leads to more accurate consensus forecasts, quicker news incorporation into prices, enhanced stock informativeness, reduced insider informational advantage, and improved liquidity. Our results support the bias hypothesis: local subsidiary signals can mislead, and curtailing access improves market efficiency.