The Effects of Analyst-Country Institutions on Biased Research: Evidence from Target Prices

• 成果类型: Article
• 署名作者: Bradshaw, Mark T.; Huang, Alan G.; Tan, Hongping
• 署名单位: Boston College; University of Waterloo; McGill University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12245
• 发表日期: 2019
• 页码: 85-120
• 关键词: CONFLICTS-OF-INTEREST; stock recommendations; EARNINGS FORECASTS; accuracy; investors; matter; LEGAL; performance; incentives; valuation

摘要

Prior research demonstrates that a strong institutional infrastructure in a country moderates self-serving behavior of market participants. Cross-country economic activities have increased significantly, presenting a research opportunity to examine the relative influence of local versus foreign institutional infrastructure on individual market participants. We utilize variation in analyst-country location relative to covered firm location to examine institutional determinants of optimism in analyst research. Focusing on target prices, where persistent optimism is well documented, we find that analysts domiciled in countries with stronger institutional infrastructures exhibit significantly attenuated target price optimism and more value-relevant target prices. Our results demonstrate the importance of domestic country-level institutional factors in moderating self-serving behavior of market participants engaged in cross-country activities.