Yong Yu and Shuping Chen at the University of Texas at Austin's McCombs School of Business made an unexpected discovery: an analyst's cultural background can predict whether they'll make money in the stock market. By examining the surnames of 3,797 financial analysts between 2000 and 2014, they found that analysts whose ancestral cultures emphasize long-term planning consistently outperformed their peers in a field obsessed with quarterly earnings.
The research, published in Contemporary Accounting Research, touches on something rarely discussed in finance: how inherited cultural values shape the way professionals see the future. "Some cultures place greater emphasis on planning for the future, which may influence how analysts approach long-term information," Yu explains. Using historical immigration data and the Onomap database—which draws from telephone directories and electoral registers—the researchers linked surnames to countries of origin and scored each analyst's cultural background using social psychologist Geert Hofstede's established framework for measuring long-term orientation across cultures.
The numbers tell a striking story. Analysts from long-term-oriented cultural backgrounds beat market returns by 0.30% monthly—a difference that compounds significantly over time. They were 7.6% more likely to make long-term earnings predictions (defined as more than one year ahead), and 11 percentage points more likely to use sophisticated valuation models like discounted cash flow analysis that reveal true long-term performance. Their stock picks beat expected returns by 0.61% a month, compared with 0.31% for analysts from cultures with less long-term focus.
What matters most is that these weren't just longer predictions—they were better ones. When it came to short-term forecasts, analysts from long-term-oriented cultures performed just as well as their peers, suggesting their real value lies in the horizon most investors ignore. Their recommendations proved especially profitable for companies where value depends on hard-to-measure long-term prospects: growth-oriented firms, innovation-intensive businesses, and companies with uncertainty built into their balance sheets.
The researchers discovered another telling pattern in earnings call transcripts. Analysts from long-term-oriented cultures were more likely to prompt company managers to disclose more forward-looking information—essentially pushing the market toward the very kind of transparency that benefits long-term investors. This created a virtuous cycle, where cultural orientation didn't just influence prediction style but actually shaped what information became available to everyone.
In a financial world that "often focuses on near-term performance rather than the long-term value creation, which could be a myopic kind of behavior," as Yu notes, this research offers a quiet argument for diversity. Markets haven't yet solved the problem of rewarding short-term thinking at the expense of genuine value creation. But analysts who carry a cultural inheritance emphasizing patience and planning offer something rare: a complementary perspective grounded in centuries of different assumptions about time and money.
The implication extends beyond individual stock pickers. Brokerage houses and investment banks that assemble teams bringing both short-term and long-term viewpoints may build more resilient investment strategies. As Yu puts it: "We need both the short-term and the long-term prospects in the market. That way, you will have a more accurate, comprehensive picture of a firm's value."