Do star analysts know more firm-specific information? Evidence from China

Xu, Nianhang; Chan, Kam C.; Jiang, Xuanyu; Yi, Zhihong

doi:10.1016/j.jbankfin.2012.08.014

Cited by 165 publications

(75 citation statements)

References 18 publications

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“…Exploiting a unique set of analyst rating data produced by China's New Fortune magazine, Xu et al (2013) confirm the general conclusion of a positive association between analyst coverage and stock return synchronicity measured by a firm's R-square documented by Chan and Hameed (2006) using data from 25 emerging markets, suggesting that analysts in emerging markets are generally not able to produce firm-specific information. However, the findings on star analysts show that star analyst coverage actually decreases stock return synchronicity, suggesting that star analysts are able to do a better job in producing firm-specific information given their superior human capital.…”

Section: Institutional Investors and Sell-side Analystssupporting

confidence: 53%

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

2014

China Account Financ Rev

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China’s stock market has gone through major structural changes since its inception in the early 1990s. In this survey article, we review the empirical literature published in 15 leading accounting and finance journals from 1998 to 2013 that documents these important structural changes. In analysing this literature, we focus on the ‘distinctiveness’ of the Chinese stock market compared with developed stock markets (e.g. US) and the research opportunities generated by the China setting. Key themes include China’s share issue privatisation (SIP) reforms, the political connections in privately owned companies, the characteristics of Chinese listed companies and their governance, the regulatory environment reforms in China, and the evolving role played by auditors and other information intermediaries.

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Section: Institutional Investors and Sell-side Analystssupporting

confidence: 53%

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

2014

China Account Financ Rev

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“…To proxy for semi-public information, we use data on analyst recommendations. This choice follows Kim and Verrecchia (1994) and is supported by the empirical literature that shows that active financial analysts are able to process better information, particularly in the global markets (e.g., Chang et al, 2001, Jin and Myers 2006, Bae et al, 2008, Xu et al, 2013. In the same spirit, we use media reports as a proxy for pure public information because media reports typically involve less in-depth judgments, as we will discuss shortly.…”

Section: B Information and Governance Proxiesmentioning

confidence: 94%

“…Relying on Kim and Verrecchia (1994) and on the accumulated empirical evidence indicating that analysts are able to process information, particularly in the global market (e.g., Chang et al, 2001, Jin and Myers, 2006, Bae et al, 2008, Xu et al, 2013, we use changes in analyst recommendations as a proxy for semi-public information. We further proxy for the use of semi-public information of a fund with the sensitivity of its semi-annual changes in stock holdings to the contemporaneous changes in analyst recommendations for a specific stock.…”

Section: Introductionmentioning

confidence: 99%

Mutual Funds and Information Diffusion: The Role of Country-Level Governance

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. (0)10 408 9031 Duisenberg school of finance is a collaboration of the Dutch financial sector and universities, with the ambition to support innovative research and offer top quality academic education in core areas of finance. Terms of use: Documents in AbstractWe hypothesize that poor country-level governance, which makes public information less reliable, induces fund managers to increase their use of semi-public information. Utilizing data from international mutual funds and stocks over the 2000-2009 period, we find that semi-public information-related stock rebalancing can be five times higher in countries with the worst quality of governance than in countries with the best. The use of semi-public information increases price informativeness but also increases information asymmetry and reduces stock liquidity. It also intensifies the price impact and liquidity crunch during the recent global financial crisis.

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“…Studies on Chinese stock analysts appear limited in scope and number in the existing literature and focus on the performance of individual analysts (for instance, Hu et al, 2008;Barniv, 2009;Barniv and Bao, 2009;Xu et al, 2013;Gu et al, 2013). Research on the quality of analysts' consensus expectations appears scant and this paper aims to contribute towards filling this gap.…”

Section: Introductionmentioning

confidence: 99%