Pre-modern and modern basis of affiliation and the accuracy of analysts’ forecast of Indian firms

We test an implicit assumption of neo-institutional theory that multiple institutional logics might shape individual economic action by examining how pre-modern and modern basis of network tie formation between equity analysts and the CEOs of the publicly listed Indian firms they followed influenced the accuracy of earnings forecast issued by the equity analysts during the period 2001 to 2010. Equity analysts in emerging economies often rely on social ties to access material information required to make accurate earnings forecasts. The Indian setting allows us to jointly examine network ties formed on the basis of pre-modern institutional logics of caste and language with network ties formed on the basis of modern institutional logics of university co-affiliation. In addition, India has a diversity of organizational forms to organize for-profit businesses. This allows us to compare how two different organizational forms (business group affiliation or multinational corporations) moderate the effect of social ties on equity analysts’ evaluations. This paper advances neo-institutional theory by showing how pre-modern institutions such as kinship (caste) and ethnicity (language) affect individual economic action in emerging economies as well as by demonstrating that business groups may act as carriers that lead to the persistence of such pre-modern logics.