What do analysts do? Discussion of ‘‘Information interpretation or information discovery: which role of analysts do investors value more?’’ Kin Lo Published online: 21 June 2012 Ó Springer Science+Business Media, LLC 2012 Abstract Three decades of accounting and finance research has extensively studied the outputs from financial analysts. However, there is sparse systematic evidence on what analysts do to generate their outputs in the form of forecasts, recommendations, and research reports. Livnat and Zhang (Rev Account Stud, 2012) provide interesting new evidence regarding the relative amount of value added that analysts produce by examining investors’ reaction to analysts’ forecast revisions issued promptly after firms’ public disclosures compared with those issued at other times. Their analysis shows that prompt revisions are associated with larger returns, which the authors interpret as evidence that analysts’ ability to interpret public disclosures is more valuable to investors. Three issues bear consideration in the interpretation of these findings. Keywords Analyst research Á Information content Á Earnings announcements Á Information discovery JEL Classification G14 Á G29 Á M41 Á M45 1 Introduction Financial analysts are an important and enduring feature of financial markets. They contribute to the informational efficiency of these markets through the issuance of forecasts of earnings, revenues, and cash flows; buy/sell recommendations; and research reports. Given the significant number of well-paid financial analysts K. Lo (&) Accounting Division, Sauder School of Business, The University of British Columbia, 2053 Main Mall, Vancouver, BC V6T 1Z2, Canada e-mail: kin.lo@sauder.ubc.ca 123 Rev Account Stud (2012) 17:642–648 DOI 10.1007/s11142-012-9195-6