Are all analysts created equal? Industry expertise and monitoring effectiveness of financial analysts

• 成果类型: Article
• 署名作者: Bradley, Daniel; Gokkaya, Sinan; Liu, Xi; Xie, Fei
• 署名单位: State University System of Florida; University of South Florida; University System of Ohio; Ohio University; University System of Ohio; Miami University; University of Delaware
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.01.003
• 发表日期: 2017
• 关键词: earnings management; firm performance; Audit committee; ceo turnover; disclosure; DIRECTORS; coverage; MARKET; BOARD; recommendations

摘要

We examine whether analysts' prior industry experience influences their ability to serve as effective external firm monitors. Our analyses of firms' financial disclosure quality, executive compensation and CEO turnover decisions portray a consistent picture that related pre-analyst industry experience is of critical importance for analysts to play an effective monitoring role. Coverage by analysts with such experience is associated with reduced earnings management, lower probability of committing financial misrepresentation, less CEO excess compensation, and higher performance sensitivity of CEO turnover. We also provide evidence on several plausible mechanisms through which industry expert analysts exert monitoring efforts and limit managerial opportunism. (C) Published by Elsevier B.V.