“Security Analyst Networks,
Performance and Career Outcomes” is an article written by J.Horton and
G.Serafeim in December-2009. Authors study
relationship of social-network connectedness and whether it provides any
informational-advantage to security analysists in the form of performance-forecasting
and bargaining power.

The article begins with discussion
of 3-advantages of information arbitrage-opportunities. These advantages are: information
diversity, information early access, information control (Horton &
Serafeim, 2009, pp 6-8). 

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Authors introduce two hypothesises
that used to build-up on the argument of social-network importance and further
tested. In consequent results-sections, they ran regressions and collected
estimates which have explanatory power. Also, authors stress about implication of
innate-ability and network-position are independent, and innate-ability cannot
influence forecast-error. Results support the theory of information advantage
as of “word-of-mouth effects” (Horton & Serafeim, 2009, p 17) due to better
network-position. Hence, better-connected individual able to make more precise,
timely forecasts, which is consistent with their first hypothesis. Authors then
state that information received via strong social-networking influences on performance,
thus, lower probability of losing job in favour of their second-hypothesis.

Finally, they study factors
that determine future network-position by controlling for accuracy of forecast
performance by introducing special-variables. They received contradict results
about the accuracy of analyst which carefully interpreted as: “Apparently, it
would appear optimistic analysts rewarded with the ability to build a stronger network
which then enables them to make better forecasts.” (Horton & Serafeim,
2009, p 23).  

It does not matter, whether
you are accurate or experienced specialist, the informational advantage of
network position exists outside of analyst’s innate ability or experience.
Therefore, “quantity is better than quality in social networking” is precisely
a quote that describes the relationship between performance and social capital
that analyst builds-up. Consequent question for further discussion is whether
this informational advantage is sufficient enough for a capital analyst or not,
against competitors who have higher innate ability?