Investors’ Reactions to Recommendation Reports by Model Minority Analysts

SYNOPSIS In the United States, individuals from Asian backgrounds are often seen as “model minorities” because they often excel academically, especially in quantitative fields. In this paper, we investigate whether investors evaluate reports authored by model minority analysts more favorably than those written by nonminority analysts. An experiment finds that when presented with analyst reports recommending a U.S. firm, investors respond more positively when a model minority analyst rather than a nonminority analyst authors the report. However, this favorable effect weakens when the firm is foreign, where the stereotype does not offset doubts about less familiar firm environments, or when investors are more sophisticated, focusing on report content rather than the analyst’s background. Overall, this study identifies the positive impact of the model minority stereotype on investor judgment and the boundary conditions that constrain this effect, offering insights that could be informative for brokerage firms, equity research professionals, and investors. Data Availability: Contact the authors. JEL Classifications: G11; M41.