The Impact of Analyst Coverage Initiation on the Market's Ability to Anticipate Future Earnings

2005 ◽  
Author(s):  
Nont Dhiensiri ◽  
Akin Sayrak ◽  
Paul Zarowin
Keyword(s):  
Analyst Coverage ◽  
Future Earnings ◽  
The Impact

Client Relationships, Analyst Coverage, and Earnings Management

2021 ◽  
Author(s):  
Zhi Jin ◽  
Bingxuan Lin ◽  
Chen-Miao Lin
Keyword(s):  
Earnings Management ◽  
Financial Markets ◽  
Capital Market ◽  
Mutual Fund ◽  
Conflicts Of Interest ◽  
Analyst Coverage ◽  
Client Relationships ◽  
Client Pressure ◽  
The Impact ◽  
A Company

Financial analysts have two important roles in the capital market. In addition to their informational role, which has been widely studied, they play an important monitoring role. Similar to their informational role, their monitoring role might be negatively affected when they face conflicts of interest. Using a sample of Chinese firms, we show that if analysts are under pressure (i.e., housed in a brokerage firm where specific mutual funds hold large positions in a company covered by the analyst), their role in lowering the firm earnings management activities is significantly compromised. We find that the closer the business relationship between the mutual fund and the brokerage firm, the greater the firm earnings management. Our findings caution investors and regulators to heed the impact of client pressure on analysts' roles in financial markets.

scholarly journals The impact of corporate tax avoidance on analyst coverage and forecasts

2019 ◽  
Vol 54 (2) ◽  
pp. 447-477 ◽  
Author(s):  
Guanming He ◽  
Helen Mengbing Ren ◽  
Richard Taffler
Keyword(s):  
Tax Avoidance ◽  
Corporate Tax ◽  
Analyst Coverage ◽  
The Impact

scholarly journals Hyperbolic discounting and life-cycle portfolio choice

2015 ◽  
Vol 14 (4) ◽  
pp. 492-524 ◽  
Author(s):  
DAVID LOVE ◽  
GREGORY PHELAN
Keyword(s):  
Life Cycle ◽  
Stock Market ◽  
Portfolio Choice ◽  
Asset Allocation ◽  
Financial Literacy ◽  
Hyperbolic Discounting ◽  
Fixed Cost ◽  
Future Earnings ◽  
Financial Wealth ◽  
The Impact

AbstractThis paper studies how hyperbolic discounting affects stock market participation, asset allocation, and saving decisions over the life cycle in an economy with Epstein–Zin preferences. Hyperbolic discounting affects saving and portfolio decisions through at least two channels: (1) it lowers desired saving, which decreases financial wealth relative to future earnings; and (2) it lowers the incentive to pay a fixed cost to enter the stock market. We find that hyperbolic discounters accumulate less wealth relative to their geometric counterparts and that they participate in the stock market at a later age. Because they have lower levels of financial wealth relative to future earnings, hyperbolic discounters who do participate in the stock market tend to hold a higher share of equities, particularly in the retirement years. We find that increasing the elasticity of intertemporal substitution, holding risk aversion constant, greatly magnifies the impact of hyperbolic discounting on all of the model's decision rules and simulated levels of participation, allocation, and wealth. Finally, we introduce endogenous financial knowledge accumulation and find that hyperbolic discounting leads to lower financial literacy and inefficient stock market investment.

scholarly journals S&P 500 Index Revisions And Analyst Coverage

2013 ◽  
Vol 29 (4) ◽  
pp. 1199 ◽  
Author(s):  
Qin Wang ◽  
Hei Wai Lee ◽  
Vivek Singh
Keyword(s):  
Information Environment ◽  
Earnings Forecast ◽  
Sample Period ◽  
Supportive Evidence ◽  
Forecast Dispersion ◽  
Analyst Coverage ◽  
The Impact

This paper examines theimpacts of revisions in the composition of the S&P 500 Index on theinformation environment of sample firms being added to or deleted from theIndex. We use the intensity (number of analysts and number of earningsestimates) and the quality (earnings forecast dispersion and accuracy) ofanalyst coverage to measure the information environment of sample firms. Wefind that firms that are added to the Index experienced significant increase inanalyst coverage while those deleted from the Index suffered reduction inanalyst coverage following the revision in the S&P 500 Index. The findingson the quality of analyst coverage also provide supportive evidence. There are increases in earnings forecastdispersion for both added and deleted firms, and improvements in forecastaccuracy for sample firms. In addition, further findings indicate a negativecorrelation between the impact of index revision on the information environmentand the intensity of pre-revision analyst coverage on the sample firms. Overall,our results suggest that index revisions have material impacts on the informationenvironment of sample firms that were added to, or deleted from, the S&P500 Index over the sample period of 1990 2007.

The Impact of IAS No. 27 on the Market's Ability to Anticipate Future Earnings

2014 ◽  
Vol 32 (2) ◽  
pp. 789-813 ◽  
Author(s):  
Audrey Wen-Hsin Hsu ◽  
Hamid Pourjalali
Keyword(s):  
Future Earnings ◽  
The Impact

The Impact of IPOs’ Analyst Coverage on the Choice and Timing of SEOs

2018 ◽  
pp. 330-358
Author(s):  
Nesrine Bouzouita ◽  
Carole Gresse
Keyword(s):  
Survival Analysis ◽  
Initial Public Offerings ◽  
Seasoned Equity Offerings ◽  
Equity Offerings ◽  
Analyst Coverage ◽  
Public Offerings ◽  
Firm Commitment ◽  
The Impact

Based on a survival analysis on a sample of initial public offerings (IPOs) undertaken on Euronext and their subsequent seasoned equity offerings (SEOs) over the period 1995–2012, this chapter shows that analyst coverage in the months following an IPO facilitates subsequent SEOs and favors the longevity of the firm’s relationship with its initial underwriter. SEOs are facilitated in several dimensions: post-IPO analyst coverage increases the likelihood of the IPO firm to conduct an SEO with a firm commitment underwriting; it increases the occurrence speed of that SEO; and it increases the probability of that SEO to be intermediated by the same underwriter as the IPO.

Does Tenure Matter: Role of the Corporate Secretary in Chinese-Listed Firms

2018 ◽  
Vol 33 (1) ◽  
pp. 181-205 ◽  
Author(s):  
Chen Wang ◽  
Qing Ye ◽  
Abhinav Goyal
Keyword(s):  
Board Meeting ◽  
Analyst Coverage ◽  
Listed Firms ◽  
Board Processes ◽  
Outside Director ◽  
Institutional Shareholders ◽  
The Impact ◽  
Variable Analysis

SYNOPSIS We study the impact of corporate secretary tenure on the governance quality of Chinese A-share listed firms. Results show that corporate secretary tenure is negatively associated with board meeting frequency, outside director in-meeting dissent, and incidence of fraud and lawsuit. Key findings are robust to an array of additional tests including propensity score matching, instrument variable analysis, as well as alternate governance measures such as analyst coverage, modified auditor opinion, number of institutional shareholders, and outside director board meeting absence. Overall, our study confirms the importance of corporate secretary in favor of modern corporate governance outcomes and board processes. JEL Classifications: G15; G30; K22; M41.

The effect of financial analysts on the economic implications of disclosed lease information – a note

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Su-Jane Hsieh ◽  
Yuli Su
Keyword(s):  
Stock Returns ◽  
Cash Flow ◽  
Stock Prices ◽  
Predictive Value ◽  
Financial Analysts ◽  
Financial Analyst ◽  
Analyst Following ◽  
Analyst Coverage ◽  
Content Type ◽  
The Impact

PurposeThe 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.Design/methodology/approachThe 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.FindingsThe 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.Research limitations/implicationsSince 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.Practical implicationsThe 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.Originality/valueThe 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.

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