Analyst coverage and earnings management

• 成果类型: Article
• 署名作者: Yu, Fang (Frank)
• 署名单位: Barclays
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2007.05.008
• 发表日期: 2008
• 页码: 245-271
• 关键词: earnings management; financial analyst; corporate governance; ANALYST COVERAGE

摘要

What is the role of information intermediaries in corporate governance? This paper examines equity analysts' influence on managers' earnings management decisions. Do analysts serve as external monitors to managers, or do they put excessive pressure on managers? Using multiple measures of earnings management, I find that firms followed by more analysts manage their earnings less. To address the potential endogencity problem of analyst coverage, I use two instrumental variables based on change in broker size and on firm's inclusion in the Standard & Poor's 500 index, and I find that the results are robust. Finally, given the number of covering analysts, analysts from top brokers and more experienced analysts have stronger effects against earnings management. (C) 2008 Elsevier B.V. All rights reserved.