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The purpose of this paper is to examine securities analyst independence in China's capital market and the effect on analyst independence of institutional investors’ shareholding and separation between control rights and cash flow rights of ultimate controller.

Using data of China's listed companies from 2006 to 2012, the authors empirically tested the relationship between analyst following and volatility of stock return. And based on the test, the authors investigated the role played by institutional investors’ ownership and separation between control rights and cash flow rights of ultimate controller.

According to the empirical results, there is a significant negative correlation between analyst following and volatility of stock return. Also, shareholding of institutional investors and the separation between control rights and cash flow rights of ultimate controllers will have an impact on the relationship between analyst following and volatility of stock return. When institutional investors hold higher proportion or the separation between control rights and cash flow rights of ultimate controllers keeps at a high level, the negative correlation between analyst following and volatility of stock return will weaken.

First, based on the theory of market intermediation, the paper examined analyst independence by investigating and analyzing the relationship between analyst following and volatility of stock return. Second, it analyzed the factors affecting analyst independence by integrating enterprise characteristic variable and market characteristic variable on the basis of introducing two variables – shareholding of institutional investors and the separation between control rights and cash flow rights of ultimate controllers.

This study aims to examine the direct and indirect effects of professional commitment, customer risk and independence pressure on money laundering risk judgment among bank analysts.

This study uses a within-subjects experimental research design and collects primary data via a questionnaire distributed to bank analysts in banking institutions in Malaysia.

Results show that professional commitment, customer risk and independence pressure significantly influence money laundering risk judgment (i.e. customer due diligence and money laundering reporting). The results also show significant interaction effects between customer risk and independence pressure in influencing money laundering risk judgment.

Professional commitment and situational factors are crucial in putting pressure on bank analysts responsible for performing a thorough check and due diligence to minimize money laundering risk to the bank.

As money laundering is lifeblood of crimes, understanding the factors influencing money laundering risk judgment would assist the affected institutions to manage the risk better and contribute towards the fight against crimes.

This study focuses on money laundering risk judgment. It contributes to understanding the competency of the gatekeepers, such as bank analysts, in practicing professional commitment and dealing with situational factors.

To show how conflicts of interest and disingenuous investment research at the end of the 1990s stock market bubble occurred in Australia as well as the USA and Western Europe.

Reviews the role of research analysts in major securities firms and conflicts of interest such as analyzing and evaluating a company for investment purposes, while seeking the investment banking business of the same company. Provides a case study of how an investment banking firm dealt with a provider of internet search services in both a research and an investment banking capacity. Investigates and evaluates the regulations and guidelines developed and introduced by the Australian regulatory bodies (Australian Stock Exchange (ASX) and Australian Securities and Investment Commission (ASIC)) and the Australian Government to deal with potential conflicts of interest that could affect the objectivity and independence of analyst research.

There were examples of conflicts of interest and fraudulent stock recommendations in Australia that rivaled the worst examples in the USA and Western Europe.

A reminder of fraudulent investment research practices during the stock market bubble and the potential for conflicts of interest between research and investment banking functions within the same firm.

The purpose of this paper is to explore conceptual issues arising in an empirical study of the emergence of a distinctive new form of expertise – of industry analysts and in particular the leading firm Gartner Group that exercises enormous influence over the Information Technology (IT) market.

The paper critically reviews existing analytical frameworks and especially work from the Sociology of Professions. This has largely focused upon groups which have already succeeded in gaining wide acceptance of the effectiveness of their methods and knowledge. For emerging expert groups a key challenge is to create an audience for whom they are expert (Turner, 2001). The study contributes to a “third wave” of studies that shift the focus of enquiry from the operation of professional institutions to the conduct of expert work – and how knowledge is produced, validated and consumed. The paper draws upon an extended ethnographic study of Gartner Inc., and other industry analysts to characterise some key features of their expertise. Data sources include over 100 hours of participant observation of industry analysts and their interactions with vendors and technology adopters at IT industry conferences; interviews with over 20 industry analysts from Gartner (including a telephone interview with its founder Gideon Gartner) and other analyst organisations; a substantial body of interviews with technology vendors and clients (particularly in relation to the Customer Relationship Management technology sector); together with a review of Gartner documentation and reports.

The paper compares the empirical findings of industry analysts with accounts from current literature on management consultants and other groups such as journalists and financial analysts. Industry analysts, like consultants, have not sought to follow a classical professional model. Thus the brand reputation of big (industry analyst or consultancy) firms provides an alternative warrant of the quality of expertise to professional institutions. However, Gartner analysts identify differences as well as similarities between their work and management consultants. Gartner’s ability to rank the offerings of IT vendors requires them to adopt formal methodologies and internal review procedures to produce defensible knowledge and demonstrate their independence. Industry analysts need to establish cognitive authority over rapidly changing technological fields. This imparts some “public good” elements to their knowledge.

The paper suggests ways forward for analysing new forms of knowledge intermediary in business and accounting, applying perspectives from the “third wave” of studies, and involving detailed study of the “epistemic systems” through which such knowledge is produced, consumed and validated (Knorr Cetina, 2010).

Much in accounting research depends upon equity valuation. Too often, what the stock of publicly traded companies trade at is taken at its face value. Knowing that valuation is a function of performance relative to consensus security analyst expectations, more needs to be known about how these expectations are created and changed. The paper aims to assert that the guidance provided by top-level company management is important to the work product of analysts. The paper develops information from managers involved in these interactions.

Semi-structured interviews were conducted with 31 high-level executives employed by large USA companies in several industries. What those companies provided was interpreted through the theoretical lens of institutional theory and amounts to a qualitative content analysis approach to the subject.

The authors find that institutional theory well describes the important features of analyst guidance. Participants are aware of the broad societal interest that exists in the outcome of the guidance process. The participants accept the need for independent analyst opinions about their companies and their future prospects. In many ways, executives provide analysts more than just raw information and employ strategic structuring for analysts to produce expectations that will allow their companies a favorable pathway to future success as such is judged by the markets. The result is understood as being in the best interests of all market participants, even if it disproportionately benefits current corporate leadership.

Results are dependent upon the interview process, needing the correct questions to be asked and the willingness of interviewees to speak their lived truth. The paper calls into question traditional capital markets studies that evaluate quantitative relationships between projected accounting balances and subsequent stock market prices as a literal truth or as the result of scientific calculation.

Market participants should be somewhat more skeptical about companies that are routinely able to meet analyst expectations. To a large extent, such displays do not just happen but instead are manufactured to take place by virtual of a careful dance that is mindful of excesses on several sides.

The antagonistic interests of two important groups in the stock market is actually an unrecognized symbiotic dependency that prioritizes continued permission.

The accounting literature is very dependent on the work product of analysts. This is a rare opportunity to peak behind the curtain of their expertise in a critical fashion. The paper breaks ranks with the literature by trying to understand the thinking behind the narratives of capital market participants.

This study aims to examine whether Chinese firms increase their concerns about analysts’ earnings forecasts following the split-share structure reform (SSR) in 2005, which removed trading restrictions on approximately 70% of the shares of listed firms.

Using data from 2002 to 2019, the authors empirically test the association between meeting or beating analysts’ earnings expectations and the implementation of SSR.

The authors find that firms are more inclined to meet analysts’ earnings expectations after the introduction of SSR. Further analysis shows that firms guide analysts to walk their forecasts down by manipulating third-quarter earnings, suggesting enhanced value relevance between analysts’ forecasts and third-quarter earnings management in the postreform period.

The findings reveal an undesirable side effect of SSR and suggest that policymakers and regulators should consider and carefully manage the complex relationships between firms and analysts.

In contrast to prior studies that predominantly focus on the positive effects of the reform, this study reveals the side effects of SSR and provides new evidence on the mechanisms of meeting or beating analysts’ earnings expectations.

The purpose of this paper is to find out whether the election of star analysts leads to the conflict of interests between analysts\institutional investors and individual investors. And then, further investigate how the election results to influence the individual investors’ decision making.

Given the fact that earnings forecasts and stock ratings are the most important foundations for the investor’s investment decision, the authors investigate the relationship among the earnings forecasts, abnormal returns and the election of star analyst. This paper further analyzes the impact factors on investors’ decision. The data used in this paper for star analysts’ information, analysts’ forecast and recommendations, as well as stock performances-related data are from 2005 to 2012.

This paper finds that mass media cannot select analysts with high forecast accuracy, and then misleads investors. It demonstrates that the analysts with poorer forecast ability and more optimistic stock recommendations are more prone to be entitled as star analysts by mass media, and these titled star analysts tend to show a poorer performance. Therefore, the star analyst worsens investors’ cognition on analysts forecast ability and then misleads investors’ decision making.

Media plays a critical role in corporate governance, information collection and diffusion and reducing the information asymmetry, however, it is good to know the role of media in financial markets from a broader perspective. Because media may also bring negative factors to the financial markets such as misguiding the investors and intensify the conflict of interests between analyst and individual investors.

This paper supports a new perspective of the role of mass media in financial market, which is different from existing studies.

The President has signed legislation, the “Sarbanes‐Oxley Act of 2002”, (the “Act”) that amends the U.S. securities and other laws in significant ways. The law changes corporate governance, including the responsibilities of directors and officers; the regulation of accounting firms that audit public companies; corporate reporting; and enforcement. Many of the Act’s provisions will be enhanced by SEC rulemaking and, probably, by stock market listing standards as well. Generally, the Act applies to U.S. and non‐U.S. public companies that have registered securities (debt or equity) with the SEC under the Securities Exchange Act of 1934. The Act is lengthy. The implications of the Act will not be fully known until the SEC adopts implementing rules and, thereafter, as interpretations develop, whether by the SEC or in litigation. This memorandum is a summary and not a complete description of the Act. It does not constitute legal advice for any particular situation.

The purpose of this paper is to investigate the perceptions of auditor independence between auditors, bank‐loan officers, and financial analysts in Bahrain.

This study examines the effect of 41 independence‐enhancing and – threatening Factors on the perceptions of auditor, bank‐loan officers, and financial analysts regarding auditor independence in Bahrain. Out of 450 questionnaires distributed, 281 usable responses were received, representing a response rate of 62.4 percent.

Overall, the three groups agree on the classification of the 41 factors into two groups; however, they do not agree on the relative importance of those factors on their perception of auditor independence. Economic reliance of auditors on their clients and the provisions of non‐audit service, competition, and long tenure of audit services are considered the most important independence‐threatening factors. The risks posed to auditors in fulfilling their audit engagement, regulatory rights and requirements surrounding auditor change, regulation concerning the appointment/remuneration of auditors, and the disclosure of financial and nonfinancial relationships are among the most important factors that are perceived by the three groups to enhance auditor independence.

The samples did not include all users of financial statements; the samples were drawn only from institutions that were willing to take part, and consequently the results might not be applicable to those that did not take part in the study; and data were collected using a survey questionnaire and this approach is subject to certain types of bias such as response bias, which may affect the reliability of the respondents' answers.

The paper can inform policy makers, governments, and professional accounting bodies in emerging markets in countries that share similar economic, political, and cultural environment on how policies and frameworks related to auditor independence can be structured to ensure adequate regulation of the capital market, and enhance the awareness of users and auditors about the contextual factors surrounding the role of an auditor, in addition to the possible threats and enhancing factors that affect auditor independence.

The paper offers rich data on the perceptions of auditors' independence of auditors and users of financial statements. This is the first time, this type of research has been conducted in Bahrain.

The aim of this paper is to analyze the impact of corporate governance (focused on some key mechanisms as board size, board independence, managerial ownership, institutional ownership, and chief executive officer duality) on financial analysts’ behavior in US. Results from panel data analysis for 294 US listed firms observed from 2007 to 2014 show that several attributes of the board of directors and audit committee have no effects on the number of analysts who are following the firm and the properties of analysts’ earnings forecasts. Findings also suggest that firms with independent and large boards and blockholders ownership benefit of more analyst following. In addition, it is proven that analysts’ earnings forecasts are optimistic and more accurate for companies where blockholder ownership, either by managers or external entities have larger quoted spreads but of lower quality for the ones which have greater independent board members and institutional investor’s holding.