Analyst forecast characteristics and the cost of debt

Mansi, Sattar; Maxwell, William F.; Miller, Darius P.

doi:10.1007/s11142-010-9127-2

Cited by 193 publications

(157 citation statements)

References 66 publications

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“…We also find that this relation holds in countries with weak and strong governance institutions, although the effects appear to be economically more important in the former. Overall, our non-U.S. findings extend the U.S. evidence in Mansi et al (2011) that financial analysts play an important governance role as information intermediaries between firms and market participants. …”

supporting

confidence: 78%

The Effects of Analyst Forecast Properties on the Cost of Debt: International Evidence

et al. 2013

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The views expressed in papers published in our series are those of the author(s) and do not necessarily represent those of any department at SBM, the SBM itself, the American University of Sharjah (AUS) and/or any of their affiliates. Additionally, all papers in the series are made available on an "as is" basis without warranties of any kind. We, that is, the relevant department at SBM, SBM, AUS and/or any of the affiliates, hereby expressly disclaim any warranties of any kind, whether expressed or implied, including without limitation, the warranties of noninfringement, merchantability, and fitness for a particular purpose. Furthermore, we offer no warranties, expressed or implied, regarding the accuracy, sufficiency or suitability of the material found in the published papers. The users have the sole responsibility for inspecting and testing all content to their satisfaction before using them. AbstractThis study investigates whether financial analysts play a governance role in international debt markets by examining the link between analyst forecast characteristics and the cost of debt financing. Using a sample of 2,686 bond issues from 35 non-U.S. countries, we find statistically and economically significant evidence that analyst activities lower bond yield spreads, after controlling for bond-and firm-level control variables as well as various country-level institutional factors. We also find that this relation holds in countries with weak and strong governance institutions, although the effects appear to be economically more important in the former. Overall, our non-U.S. findings extend the U.S. evidence in Mansi et al. (2011) that financial analysts play an important governance role as information intermediaries between firms and market participants. December 2013JEL classification: G34; G32

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confidence: 78%

The Effects of Analyst Forecast Properties on the Cost of Debt: International Evidence

et al. 2013

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“…As described previously in the ''Research Design'' section, we follow a two-step process established in prior literature (see Mansi et al 2004;Mansi et al 2011;Kecske´s et al 2013) and include the residuals from our bond rating model (Equation (1)) as an independent variable representing the effect of the bond rating orthogonal to the other independent variables. Once again, we estimate Equation (2) and cluster our standard errors by bond issue.…”

Section: Resultsmentioning

confidence: 99%

“…We also add an additional variable, Rating, to the model as recommended in the literature (e.g., Mansi et al 2004;Mansi et al 2011;Kecske´s et al 2013). Rating is estimated as the residual from Equation (1), which incorporates the effects of the bond rating information into Equation (2) while being orthogonal to the independent variables included in Equation (1).…”

Section: Methodsmentioning

confidence: 99%

“…More recent literature includes Plummer, Hutchison, and Patton (2007), Baber and Gore (2008), and Callahan and Waymire (2015). 12 For example, see DeFond and Zhang (2014b) ;Mansi, Maxwell, and Miller (2011);Kecske´s, Mansi, and Zhang (2012). 13 See Benson, Marks, and Raman (1991); Fairchild and Koch (1998); Baber and Gore (2008); Reck and Wilson (2014).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

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Government Reporting Timeliness and Municipal Credit Market Implications

Henke¹,

Maher

2016

Journal of Governmental &Amp; Nonprofit Accounting

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Municipal governments are often very slow in producing and disclosing financial statements, with the average time for filing compulsory statements taking over twice as long as the SEC-mandated time for publicly traded corporations. There are typically no governmental rules or explicit penalties connected with extended financial reporting. We propose this delay in reporting is likely to have negative capital market effects for the municipality and we investigate the credit market consequences of delayed reporting. Our empirical results are consistent with delayed reporting resulting in lower bond ratings for municipalities indicating a negative interpretation by bond rating analysts. Furthermore, we also find a higher yield for the government's bonds consistent with bond market investors also viewing this delay as a negative signal with respect to the particular government entity. Our results add to the literature on government reporting as well as the literature regarding the determinants of government bond pricing.

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“…follow O'Brien and Bhushan (1990) and Mansi et al (2011) and use the forecasts made in the one month prior to the fiscal year-end to calculate forecast dispersion and error. For example, I use the forecasts released by financial analysts during November if a company's fiscal year-end is December 31.…”

Section: H1bmentioning

confidence: 99%

How does asymmetric information relate to investment efficiency? Evidence from analysts' earnings forecasts and daily stock trading

Xie¹

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Xie, L. (2013). How does asymmetric information relate to investment efficiency? Evidence from analysts' earnings forecasts and daily stock trading (Master's thesis, Lingnan University, Hong Kong). Retrieved from http://dx.doi.org/10.14793/fin_etd.6 Terms of UseThe copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited.All rights reserved. The adverse selection and agency cost theories suggest that the informational transparency of a firm can help to reduce over-or under-investment. This thesis examines how information asymmetry influences firm-level investment efficiency for companies listed in the U.S. market from 1993 to 2009. Information asymmetry is measured by the dispersion and error of the earnings forecasts made by financial analysts. I investigate how information asymmetry affects firms' proneness to overor under-invest and the firms' deviations from the investment levels predicted by investment opportunities. To be consistent with the prior literature, I also use the volatility of daily stock returns and yearly high-low price spreads derived from daily stock trading as alternative proxies of information asymmetry. The results show that lower information asymmetry is associated with more efficient investment. Specifically, a good information environment reduces capital investment for firms that are more prone to over-invest and increases capital investment for those that are more prone to under-invest. In addition, lower information asymmetry is also negatively associated with firm investment when the firm is over-investing and is positively associated with firm investment when the firm is under-investing The results are robust across different regression methodologies and to different estimates of the variables. My findings are consistent with the agency theories of adverse selection and principal-agent conflict. DECLARATIONI declare that this is an original work based primarily on my own research, and I warrant that all citations of previous research, published or unpublished, have been duly acknowledged.

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Analyst forecast characteristics and the cost of debt

Cited by 193 publications

References 66 publications

The Effects of Analyst Forecast Properties on the Cost of Debt: International Evidence

The Effects of Analyst Forecast Properties on the Cost of Debt: International Evidence

Government Reporting Timeliness and Municipal Credit Market Implications

How does asymmetric information relate to investment efficiency? Evidence from analysts' earnings forecasts and daily stock trading

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