Revisiting Zuckerman's (1999) Categorical Imperative: An Application of Epistemic Maps for Replication

Abstract

Academic Abstract: We revisit Zuckerman’s (1999) “The Categorical Imperative: Securities Analysts and the Illegitimacy Discount,” which theorizes that when organizations are recognized as legitimate players in a category, they perform better. A replication exercise fails to reproduce two of three sets of results. Assisted by data shared by the original author, we find evidence that the inconsistency is due to a coding error in the original and differences between analyst data sets. We illustrate the use of epistemic maps and evaluate the theory’s predictive power across a broad set of plausible empirical assumptions and also for a subsequent time period. The results are not robust. We conclude that these data provide little evidence to support strategic recommendations. Challenges and remedies for replication are discussed. Managerial Abstract: This paper replicates a 1999 study “The Categorical Imperative: Securities Analysts and the Illegitimacy Discount” (Zuckerman, 1999). A key implication of the 1999 study is that firms should actively seek to be covered by analysts who specialize in their industries, and that a failure to be covered by analysts who are industry specialists will lead to lower capital market valuations. Our replication exercise indicates that there is insufficient evidence to recommend actively managing coverage along this dimension.