Institutional openness and analyst competition in China's capital market: Evidence of information acquisition advantages

The factors driving analyst competition have emerged as a critical research topic while firm characteristics and external environments affect analyst competition. However, the impact of institutional openness is underexplored in the current literature. Based on a quasi–natural experiment of the Administrative Measures for Foreign-Invested Brokerage Firms, we examined the effects of institutional openness on analyst competition using a difference–in–differences model (DID). Our research illustrates that greater institutional openness improves analyst competition through information acquisition advantages. The positive impact of institutional openness on analyst competition was more pronounced in brokerage firms with shorter establishment times and companies with less investor attention. Finally, analyst competition caused by institutional openness enhanced the market information transmission efficiency. The findings provide essential contributions to understanding the institutional openness effect and characteristics of the analyst industry. [Display omitted] •Institutional openness positively affects analyst competition.•Action channels are analysts who have unique competitive advantages.•Brokerage features and investors' attention impact this relationship.•The combined positive effects enhance market information transmission efficiency.•Institutional openness and healthy market competition nexus are recommended.