What is the value of sell-side analysts? Evidence from coverage initiations and terminations

• 成果类型: Article
• 署名作者: Li, Kevin K.; You, Haifeng
• 署名单位: University of California System; University of California Riverside; Hong Kong University of Science & Technology
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.08.006
• 发表日期: 2015
• 关键词: INVESTOR RECOGNITION; MARKET-SEGMENTATION; EARNINGS FORECASTS; asset prices; INFORMATION; illiquidity; selection; IMPACT; FIRMS

摘要

We investigate three potential channels of analyst value creation: improving fundamental performance through monitoring, reducing information asymmetry, and increasing investor recognition. We show that changes in investor recognition have consistent explanatory power for the market reaction to coverage initiations and terminations but find mixed evidence for changes in information asymmetry and no evidence for changes in fundamental performance as determinants of the market reaction. These results suggest that analysts create value for firms under their coverage by improving their investor recognition and not by monitoring or reducing information asymmetry. (C) 2015 Elsevier B.V. All rights reserved.