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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.

The purpose of this paper is to investigate whether financial analyst coverage affects the dissemination of disclosed operating lease information into cash flow predictions and stock prices.

The difference in lease expense between capital/finance lease and operating lease reporting is estimated based on the approach in Hsieh and Su (2015). This difference is referred to as the earnings impact from operating lease capitalization and is only available from footnotes. The authors then include the level of financial analyst following in a cash flow model to study its impact on the cash flow predictive value of the earnings impact. Similarly, the level of financial analyst following is inserted in an earnings-return model to assess the effect of analyst coverage on the association between contemporaneous stock returns and earnings impact.

The authors find that the cash flow predictive value of the earnings impact shifts to the interaction between analyst coverage and the earnings impact, suggesting that the decision-usefulness of the earnings impact is conditioned on the level of analyst following. Nevertheless, the authors find that the earnings impact continues to have explanatory value for the contemporaneous stock returns, while the interaction between analyst coverage and the earnings impact does not. This finding suggests that the earnings impact is already fully reflected in stock prices regardless of analyst following.

Since the estimation of the earnings impact from reporting operating leases as capital leases is based on the method developed by Imhoff et al. (1991), the results and inferences are thus constrained by the validity of the method.

The authors find that financial analyst activities accelerate the incorporation of the earnings impact from operating lease capitalization in cash flow predictions, but it does not promote the impounding of the earnings impact into stock prices. This finding suggests that financial analysts' influence on the dissemination of the earnings impact hinges on the type of economic activity, and failing to consider the financial analyst following in studying the cash flow predictive value of the earnings impact would obscure the findings.

The authors extend the findings of prior research that financial analysts' activities promote the incorporation of firm-specific information into stock prices by investigating the impact of financial analysts on the dissemination of disclosed operating lease information.

This paper aims to focus on the role of financial analysts in corporate fraud in the Chinese stock market.

Data on the analyst coverage and all the types of corporate fraud were obtained for 16,284 company-year observations of Chinese companies. The sample was subsequently divided into those of state-owned enterprises, before and after financial crisis.

The overall results indicate that analyst coverage effectively deters the occurrence of fraud. The sub-sample results suggest that the impact of analysts on deterring fraud is more pronounced in non-state-owned enterprises, especially after the financial crisis. The path analyses show that analyst coverage can deter corporate frauds by affecting information transparency and investor attention. Furthermore, the results show that the deterrence role of financial analysts varies with fraud types: it is more pronounced in deterring disclosure fraud, but not as effective in illegal guarantees and illegal insider dealing. Moreover, analyst coverage can deter the occurrence of fictitious reporting, intentional postponement and material omission.

This paper not only examined the overall fraud probability but also taking into consideration the heterogeneity of the information availability and research focus of financial analysts and examined the analysts’ impact on the occurrence of difference types of fraud. Moreover, this paper explored why financial analysts can deter corporate frauds through path analyses.

The purpose of this paper is to study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, the paper explores the relationships between customer value disclosure, analyst following, and earnings forecasts, taking into account environmental dynamism as captured by R&D intensity, sales variability, and the reverse of industry concentration.

The paper considers the possibility that a firm's information dynamics may simultaneously affect disclosure strategy, analyst following, and analyst forecasts. Regression models are used in the testing of the hypotheses.

First, results show that customer value disclosure is positively associated with analyst following and consensus in analyst earning forecasts. Second, environmental dynamism enhances the association between customer value disclosure and analyst following as well as consensus among analysts. Those results suggest that customer metrics attract analysts and improve their ability to forecast earnings. Moreover, customer value disclosure appears particularly relevant for forecasting earnings of firms involved in dynamic environments.

Customer value disclosure would allow financial analysts to better assess future earnings in a context of uncertainty. Moreover, analysts may be reluctant to follow a firm facing high environmental dynamism without a clear corporate disclosure commitment. In such a context, managers may consider disclosing strategic information in an attempt to attract financial analysts.

The findings reveal that the relations between customer value disclosure, analyst following, and analyst forecasts are not straightforward but are affected by a firm's environmental uncertainty.

This paper aims to make a comparison, different from existing literature solely focusing on voluntary earnings forecasts and ex post earnings surprise, between the effects of mandatory earnings surprise warnings and voluntary information disclosure issued by management teams on financial analysts in terms of the number of followings and the accuracy of earnings forecasts.

This paper uses panel data analysis with fixed effects on data collected from Chinese public firms between 2006 and 2010. It uses an exogenous regulation enforcement to minimise the endogeneity problem.

This paper finds that financial analysts are less likely to follow firms which mandatorily issue earnings surprise warnings ex ante than those voluntarily issue earnings forecasts. Moreover, ex post, they issue less accurate and more dispersed forecasts on former firms. The results support Brown et al.’s (2009) finding in the USA and suggest that the earnings surprise warnings affect information asymmetries.

This paper justifies the mandatory earnings surprise warnings policy issued by Chinese Securities Regulatory Commission in 2006.

Mandatory earnings surprise is a unique practical regulation for publicly listed firms in China. This paper, for the first time, provides empirical evaluation on the effectiveness of a mandatory information disclosure policy in China. Consistent with existing literature on information disclosure by public firms in other countries, this paper finds that, in China, voluntary information disclosure captures more private information than mandatory information disclosure on corporate earnings ability.

The purpose of this paper is to examine the impact of a firm’s corporate governance (CG) mechanisms on the number of financial analysts following UK firms. The potential effect of the number of analysts following firms in the UK on the association between CG mechanisms and firm value was also examined.

Multiple regression models were used to examine the association between CG, analyst coverage and firm value for a large sample of UK firms listed in London Stock Exchange with financial year ends between January 2003 and December 2008.

It was found that the aggregate level of CG quality is positively associated with the number of analysts following UK firms. In addition, the compensation score is the main component that affects the number of analysts following UK firms. The results suggest that financial analysts are particularly concerned with how much compensation executives and directors receive. This is consistent with Jensen and Meckling (1976) who argue that chief executive officer (CEO) compensation can be used as effective mechanisms for mitigating agency costs. Hence, higher levels of CEO compensation attract more financial analysts to follow the firm. Surprisingly, when the joint effect of both CG quality and the number of analysts following on firm value was examined, no significant effect was found for both variables on firm value.

This paper contributes to prior research by providing the first empirical evidence on the impact of disaggregated levels of CG on analyst following and firm value for a large sample of UK firms.

The purpose of this study is to examine whether financial analysts mislead investors in recognizing the differential persistence of the three cash flow components of earnings, defined by Dechow et al., in forecasting annual earnings.

The paper uses Mishkin's econometric approach to compare the persistence of the cash flow components within and across the historical, analysts' and investors' weightings.

It is found that financial analysts' weightings of the cash flow components are more closely aligned with the historical relations than are investors' weightings, both in direction and in magnitude. The degree of analysts' mis‐weighting is economically small and much lower than the degree of investors' mis‐weighting. Moreover, the extent of both investors' and analysts' mis‐weightings of the cash components is generally smaller for firms with greater levels of analyst following, a proxy for the quality of the information environment.

The findings suggest that financial analysts' bias in weighting the cash components of earnings is at best a partial explanation for investors' bias.

This study is important to academics and the investment community that relies upon financial analysts as information intermediaries, because the ability of analysts to incorporate value‐relevant information in their published expectations may impact securities prices.

The study is the first to document the weightings of the cash components of earnings by financial analysts. In addition, this paper provides evidence that financial analysts, as information intermediaries, are less biased than investors in processing not only the accrual but also the cash components of earnings.

This paper aims to investigate whether a high level of voluntary disclosure attracts sell-side analysts. In other words, the authors check whether the number of analysts following a given firm increases with the extent of voluntary information that corporate managers provide in annual reports.

The paper relies on regression analyses to study the relationship between the level of coverage by sell-side analysts and the extent of voluntary disclosure for a sample of 155 non-financial firms listed on the Euronext Paris stock exchange and members of the SBF 250 index.

The empirical results show that the number of analysts following a given firm increases with the extent of voluntary disclosure. Consequently, the authors conclude that analysts are interested in the volume of information provided voluntarily by corporate managers. Their interest varies across the voluntary-information categories (strategic, financial, non-financial and governance) disclosed in annual reports.

This study extends previous research by investigating sell-side analysts’ preferences in terms of voluntary-information categories in annual reports. A better understanding of the effects of sub-categories of voluntary information is useful to corporate managers wishing to meet market expectations and attract sell-side analysts. In fact, the authors verify how each category of disclosed information (strategic, financial, non-financial and governance) affects the analyst coverage intensity. In addition, the authors apply our study in the rather interesting empirical setting that is France, which is characterized by a low investor protection and a large number of active analysts.

The purpose of this paper is to report on research concerning financial analysts’ activity surrounding profit warnings issued by listed companies in the four largest European stock exchanges (France, Germany, the Netherlands and the UK). The authors address three aspects of analysts’ forecasts: ex-post accuracy of forecasts, earnings forecast revisions, and consensus forecast dispersion. The goal of the analysis is to study the differences between financial analysts’ behavior within different regulatory settings, namely common law vs civil law countries.

The sample is composed of 1,330 profit warnings issued by listed European firms during the period 2000-2010. The authors apply event study methodology and OLS regressions to highlight the impact of the legal information environment on analysts’ reactions.

The empirical analysis reveals that analyst activity depends on each country’s legal context factors, such as the legal information environment of the firm and the index of investor protection. Accordingly, the authors show that both a richer legal information environment and stronger country-level investor protection substantially improve analyst accuracy around profit warnings.

The sample is only composed on firms from four European countries owing to a lack of firms from other European countries that disclosed PW during the period 2000-2010. It would be pertinent to conduct future research dealing with an international sample from different continents.

The paper contributes to a deeper understanding of analysts’ reactions to profit warnings. The findings can influence firms’ reporting practices and lead to future regulation policies.

This work is the first to examine the relationship between profit warning releases and the behavior of financial analysts in a pan-European context where there are different institutional levels of investor protection.

To examine whether both the value relevance of accounting information, and the quality of earnings affect financial analysts' revisions of forecast annual earnings per share soon after an earnings release.

For firms whose accounting earnings provide either a basis for firm valuation or new information, analysts are predicted to revise earnings forecasts in response to the magnitude of surprise in the earnings release. Using publicly available data, regression analysis explores the influence of earnings response coefficients (ERCs), unexpected earnings, and interactions between ERCs, the association between earnings and returns, and unexpected earnings on forecast revisions after earnings announcements.

Empirical tests demonstrate a positive relation between the percentage of analysts revising forecasts soon after interim earnings announcements and firm‐specific ERCs, the interaction between the magnitude of earnings surprises, ERCs, and earnings‐returns associations, and pre‐announcement dispersion in forecasts. The results suggest that usefulness of earnings releases is related to the magnitude of new information in the release, the persistence of earnings innovations, the firm‐specific mapping between earnings and returns, and prior uncertainty about earnings.

This paper examines forecast revisions only soon after earnings announcements. Future research should examine more general determinants of analysts' forecast revision activity.

This paper provides evidence about determinants of forecast revision frequency, a measure of how actively financial analysts provide information, an extension of prior research that focuses on analyst following as a measure of information environments.