Do Firms Use M&amp;A Business to Pay for Analyst Coverage?

Sibilkov, Valeriy; Stráska, Miroslava; Waller, H. Gregory

doi:10.1111/fire.12022

Cited by 13 publications

(2 citation statements)

References 37 publications

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“…Bushee and Miller (2012) noted that some firms may resort to hiring investor relations professionals to pitch their business to analysts, and Kirk (2011) stated that firms are prepared to buy paid-for research. Sibilkov et al (2013) found that firms value analyst coverage and are prepared to strategically use the choice of appointments for mergers and acquisitions advisors to secure analyst coverage.…”

Section: Introductionmentioning

confidence: 99%

The impact of corruption on analyst coverage

Hassan

Giorgioni

2019

MAJ

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This study investigates the impact of country-level corruption and firms' antibribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption. Design/methodology/approach: It employs a negative binomial count regression method on a longitudinal dataset of a sample of S&P Global 1200 companies for the years 2010 to 2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms' anti-bribery policies variables were instrumented. Findings: After controlling for potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attract more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant. Practical implications: Given the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage which will reinforce the benign effect of monitoring.

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Section: Introductionmentioning

confidence: 99%

The impact of corruption on analyst coverage

Hassan

Giorgioni

2019

MAJ

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“…In particular, we controlled for firm size using trade volume (log), for firm performance using return on equity (ROE) and market share, and for firm strategic resource allocation using advertising intensity and intangibles and depreciation as shares of total assets (Litov et al, 2012). We also controlled for merger and acquisition (M&A) activity using a mergers expenditure (log) variable since M&As have been shown to affect analyst coverage (Sibilkov, Straska, & Waller, 2013). We also controlled for the number of segments in which a firm reports sales (four‐digit Standard Industrial Classification [SIC] codes) and firm typicality—namely, each firm's average similarity to other firms in its industry (four‐digit SIC)—as these factors have been shown to affect audience evaluations (Smith, 2011; Zuckerman, 1999).…”

Section: Methodsmentioning

confidence: 99%

Going beyond optimal distinctiveness: Strategic positioning for gaining an audience composition premium

Majzoubi

Zhao

2022

Strategic Management Journal

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Research Summary A core question in strategy research is how firms should position themselves to gain favorable audience evaluations. Emphasizing the heterogeneity in audience predispositions, we propose that firms can gain an audience composition premium by strategically positioning themselves to gain more (less) attention from audiences with positive (negative) predispositions toward them. We argue that this approach to strategic positioning is more conducive for firms with high dispersion in their audience predispositions and that firms can increase their ability to gain an audience composition premium by engaging with audiences holding moderately diverse evaluative schemas. We employ recommender systems and topic modeling to analyze 152,312 firm‐analyst‐year observations from 1997 to 2018 and 297,931 earnings call transcripts of U.S. public firms and find strong support for our predictions. Managerial Summary A key question managers encounter is how to increase their firms' evaluations from external evaluators such as security analysts. In this study, we show that firms can increase their aggregate analyst recommendations by influencing the composition of analysts who opt to cover them and gaining evaluations from analysts who have more favorable predispositions toward them (i.e., by gaining an audience composition premium). Our findings also suggest that gaining an audience composition premium is more important for enhancing a firm's aggregate analyst recommendations when there is a higher dispersion in analyst predispositions toward the firm. To increase its ability to gain an audience composition premium, the firm should engage with analysts who exhibit a moderate degree of heterogeneity in their evaluative schemas.

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WITHDRAWN: Change of information uncertainty and analysts’ earnings forecast inefficiency: Evidence from mergers and acquisitions

Chao

Zhang

et al. 2018

International Review of Economics & Finance

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Do Firms Use M&A Business to Pay for Analyst Coverage?

Cited by 13 publications

References 37 publications

The impact of corruption on analyst coverage

The impact of corruption on analyst coverage

Going beyond optimal distinctiveness: Strategic positioning for gaining an audience composition premium

WITHDRAWN: Change of information uncertainty and analysts’ earnings forecast inefficiency: Evidence from mergers and acquisitions

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