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This paper documents the effect of different types of information on the value of financial analysts.

The authors use the pooled OLS regression and the data of nonfinancial firms from France to test our hypotheses. The data covers the period between 1997 and 2019.

The results show that analysts are more likely to cover those firms that incorporated greater proportion of market-wide information in their prices. Consistent with the economies of scale view, the authors argue that analysts specialize in the interpretation market-wide information. By doing so, they are able to cover relatively large number of firms simultaneously. The results also show that the value of analyst coverage (measured as the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) is a function of the extent to which different types of information are incorporated in prices. The authors’ results suggest that the impact of analyst coverage on firm value and on probability of crash is less pronounced in firms that incorporate greater proportion of market-wide information. In case of probability of jump, the results show that the impact of analyst coverage is more pronounced firms that incorporate greater proportion of market-wide information.

The major contribution of this paper is to document the impact of different types of information on the extent of analyst coverage. Furthermore, this paper also uses various measures (the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) to show how different types of information affects the value of analyst coverage.

This study aims to investigate the impact of country-level corruption and firms’ anti-bribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption.

This study used a negative binomial count regression method on a longitudinal data set of a sample of S&P Global 1200 companies for the years 2010-2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms’ anti-bribery policies variables were instrumented.

After controlling potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attracts more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant.

Given the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage, which will reinforce the benign effect of monitoring.

Although the literature on corruption at the country level is rich, it is geared towards the determinants of corruption in contrast to its consequences, and fewer studies have focused on the impact of corruption at firm level because of data limitations. This paper addresses this gap and contributes to the literature on the consequences of corruption at firm level.

What is the role of analysts in reducing agency problems and information asymmetry between stockholders and managers? The purpose of this paper is to confirm the analyst’s role by examining his or her influence on CEO compensation structure.

The major population for this study consists of publicly traded corporations of the S & P 1500 for which data on CEO compensation is available from Standard & Poor’s Execucomp database, along with the proxy statements of these firms. Regression analysis is used to test hypotheses about the effect of analyst coverage on CEO compensation.

The evidence shows that CEOs of firms with greater analyst coverage or higher analyst coverage quality (analyst coverage index) have higher pay-for-performance (Delta), more compensation incentives to increase firm risk (Vega), more total compensation, and more excess compensation. Even after controlling for the effect of other types of corporate governance, including internal governance and institutional holdings, analysts’ activities still have an incremental effect on CEO compensation structure.

The authors findings may be useful to investors who use analyst coverage to evaluate the firm’s CEO compensation, as it suggests that investors may reference the information about analyst coverage of firms to craft appropriate CEO compensation structures.

The authors results contribute by showing that the extra effect of analyst activities on CEO compensation structure exists, even after controlling for other types of governance mechanisms, such as internal governance and institutional investors’ holdings.

Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether financial analyst coverage declined over the past decade and if any loss of analyst coverage is associated with a change in forecast accuracy.

After investigating, and confirming, a general decline in analyst following, the authors calculate the loss of analyst coverage relative to the firm-specific maximum between 2009 and 2013. In multivariate analyses, the authors then examine whether this loss of coverage differs across geographic region, firm size and capital market development, and whether it is associated with consensus analyst accuracy.

Results indicate that between 2011 and 2021, firm-specific analyst coverage globally declined 17.8%, while the decline in the EU was an even greater, 28.5%. Within the EU, results are most pronounced for small-cap firms. As a consequence of the loss of coverage, the authors observe a global decline in forecast accuracy, with EU small-cap firms and firms domiciled in EU non-developed capital markets faring the worst.

This study is the first to document a concerning global decline in analyst coverage over the past decade. The study results provide broad-based empirical support for anecdotal reports that smaller firms in the EU and those in EU non-developed capital markets bear the brunt of consequences stemming from changes in the sell-side analyst industry.

This paper aims to document the relationship between advertising expenditures and analyst coverage in a sample of Indian firms during the period between 2000 and 2019.

In order to test the effect of advertising expenditures on the extent of analyst coverage, the authors estimate various versions of pooled ordinary least squares (OLS) regression. The dependent variable (ANALYST) measures the total number of analysts covering a firm in a given year. The main independent variable of interest in this paper represents the advertising activity. The authors define the extent of advertising activity (ADVERT) as the ratio of total advertising expenditures and total assets.

The study’s results show that advertising expenditures have a significantly positive impact on the extent of analyst coverage and are robust across various proxies of the key variables and various estimation procedures.

There are a number of key takeaways from our study. First, firms that expend more resources on advertising are more likely to be followed by analysts which is associated with better performance, lower information asymmetries associated and high advertising expenditures. Second, stock prices with more information embedded in them may signify that these firms receive more attention from investors and have lower information asymmetries. And finally the impact of advertising on the decision of an analyst to cover a firm becomes more pronounced for firms with high stock price synchronicity. All these three main conclusions are giving investors a clear insight on analyst coverage, advertising expenditure and the link between the two.

The results are consistent with the argument that advertising expenditures induces analysts to cover firms because firms with high advertising activities are more likely to have better performance, lower information asymmetries and increased attention from investors. All of these factors are supposed to facilitate the analyst coverage.

The purpose of this paper is to study the relationship between institutional holdings and analyst coverage in the context of the heterogeneous nature of institutional investors.

Similar to prior studies (e.g. Ke and Ramalingegowda; Ramalingegowda and Yu), this paper obtains institutional investors' trading classifications (transient, dedicated, and quasi‐indexing) from Brian Bushee directly. To examine the hypotheses, the paper uses a two‐step instrumental variable approach demonstrated in O'Brien and Bhushan to mitigate the simultaneity relationship between the change in analyst coverage and the change in the number of heterogeneous institutional investors.

The findings suggest that such relations are different among transient, dedicated, and quasi‐indexing institutional investors. Specifically, there are three major results. First, a change to the number of analyst coverage has the lowest impact on the change in the number of dedicated institutional investors. Second, a change in the number of transient institutional investors has a higher impact on change in analyst coverage than those for change in the number of dedicated and quasi‐indexing institutional investors. Third, changes to analysts' buy or sell recommendations have the least impact on the change in the number of dedicated institutions, relative to transient and quasi‐indexing institutions.

The findings suggest that institutional investors are not homogeneous. Research studies on institutional investors need to disentangle the differences among different types of institutions.

The paper provides a comprehensive study on different institutional investors and analyst coverage. The findings show the complex nature of the interaction between institutional investors and analyst coverage.

The purpose of this paper is to examine whether high analyst coverage increases or decreases accounting conservatism.

Sample firms were selected from the Compustat and I/B/E/S databases for years 1989‐2006. The authors used both accrual‐based and market‐value‐based measures of accounting conservatism, also the extent to which negative cash flow from operations is more timely recognized via accruals than positive cash flow from operations to measure accounting conservatism. The regression analyses are conducted to test the hypotheses.

Strong evidence was found that analyst coverage is positively associated with accounting conservatism. The results suggest that firms choose more conservative accounting methods when they are followed by more analysts than when they are followed by fewer analysts. The results are robust to a battery of sensitivity analyses.

This paper sheds light on how analyst coverage affects firms' accounting choices and extends the limited research on the monitoring role of analyst coverage. The findings are consistent with the notion that analyst coverage plays an important corporate governance role in the financial reporting process. This paper also adds to the literature on the economic determinants of accounting conservatism, and provides some implications for practitioners.

The purpose of this study is to investigate the value of analyst coverage on the covered firms.

To isolate the value impact of analyst coverage, the study focuses on a unique set of firms that receive analyst coverage for the first time after having been traded in an exchange for at least one year. Event study and ordinary least square regressions are used to test the hypotheses.

There is a significant and positive price reaction at the time of the announcement of analyst coverage initiations. However, unlike the coverage initiations around the initial public offers (IPOs), the price impact is not related to the reputation of the analyst firm, the exchange listing or whether the analyst firm is also the IPO underwriter. The sample firms do not experience significant reduction in the level of information asymmetry but experience a significant increase in liquidity. The increase in liquidity only occurs after the coverage initiations. The increase in liquidity is not explained by the increase in institutional investors' interest. Finally, the price impact around a coverage initiation is positively related to the change in liquidity.

The findings suggest that firms benefit from analyst coverage through an improvement in liquidity.

This is the first study to focus on the analysts' first‐time coverage initiations. It argues that focusing on the first‐time coverage initiations provides a better analysis of the effects of analyst activities on the firm value.

The purpose of this paper is to examine the section of the Jumpstart Our Business Startups (JOBS) Act related to information dissemination by sell-side security analysts. The paper analyzes how the abolishment of the quiet period requirements for emerging growth companies (EGCs) changes the analyst initiation timing and market expectation of and reaction to the issuance of the analyst recommendations.

This paper considers the effect of the abolishment of the quiet period requirements on analyst coverage initiations for EGCs with IPOs between January 2006 and December 2015 using regression analyses and probability models.

The results confirm the current anecdotal and empirical evidence that a shorter, de facto, quiet period exists. Analyst issue stronger average ratings for EGCs than for similar firms with IPOs before the JOBS Act. EGCs with initiations from multiple analysts also experience stronger positive market reaction than the firms with initial offerings before the JOBS Act. The market seems to anticipate which EGCs will have initiations and particularly which EGCs will have initiations from multiple analysts. The investors, however, do not fully anticipate the strength of actual recommendations.

This paper is important for researchers, practitioners and policy-makers to understand how analysts impact the financial markets, how timing of analyst initiations affects stock prices of EGCs and what firm characteristics play a role in securing analyst coverage shortly after initial offerings.

This paper adds to the emerging literature on consequences of and changes brought by the JOBS Act. Specifically, this paper extends the limited literature on analyst initiations issued for firms with IPOs following the JOBS Act, timing of those initiations and magnitude of the market’s response to the initiations.

This paper aims to document the impact of product market competition on the value of analyst coverage.

This paper uses variety of estimation techniques (panel regression as well as the quantile regression approaches) and the data for nonfinancial firms from India to document the impact of product market competition on the value of analyst coverage during the period between 2001 and 2018.

The findings show that the value of analyst coverage is an increasing function of product market competition. The authors argue that better information environment associated with firms operating in industries with high competition improves the quality of research done by analysts, thereby increasing the value of analyst coverage. The study results are consistent across different subsample and remain quantitatively the same when the authors use alternate estimation procedures.

The paper provides evidence regarding the role played by product market competition – a publicly available measure – on the value of research produced by analysts within the context of emerging markets.