Analysts’ Use of Data Visualization and the Quality of Sell-Side Equity Reports

We examine the association between sell-side analysts' usage of data visualization and the quality of their equity reports using a sample of analyst reports from 2013 to 2022. First, consistent with data visualization helping analysts improve the quality of their reports, we find a significant positive association between data visualization use and the accuracy of analysts' earnings forecasts. This result persists using a variety of specifications (e.g., fixed effects, entropy balancing, and additional controls), and varies cross-sectionally in predictable ways. Specifically, the association is stronger when analysts cover firms where cognitive demands are likely to be higher, when the benefits of visual support are amplified, and when analysts better integrate their data visualizations into the text of their reports. In contrast, the association is weaker for more experienced and busy analysts, who likely place less reliance on data visualization. Second, consistent with data visualization producing insights for analysts and improving the quality of their reports, we find that analysts' use of data visualization is positively related to both the mapping between their earnings forecasts and target prices and the association between their target price revisions and stock returns. Taken together, our findings suggest that visualizations are not merely stylistic choices or persuasive devices; rather, they are integral to the way sell-side analysts construct and communicate their research outputs.