Financial analysts’ role in valuation and stewardship

Clatworthy, Mark; Lee, Edward

doi:10.1080/00014788.2017.1394607

Cited by 9 publications

(4 citation statements)

References 23 publications

(21 reference statements)

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“…The adoption of the XBRL has several advantages for financial analysts (Zhang, Riordan, & Weinhardt, 2013;Liu, Wang, & Yao, 2014;Felo, Kim, & Lim, 2018). Financial analysts provide an intermediate role in the stock markets by bridging significant gaps in the information held by firms and investors (Clatworthy & Lee, 2018). As a result, they help in reducing information asymmetry (Hussainey et al, 2003;Farooq & Satt, 2014;Yao & Liang, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Adoption of The XBRL on the Development of Stock Markets

Sassi¹,

Othman²,

Hussainey³

2021

APMAJ

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The paper examines the impact of adoption of the eXtensible Business Reporting Language (XBRL) on the development of stock markets using a large international sample. Our analysis was based on panel estimation techniques for 18 countries for a period of 20 years from 2000 to 2019. Our analysis provided empirical evidence that the adoption of the XBRL has a negative impact on the development of stock markets. This implies that strict policies are needed for the successful adoption of the XBRL and also a mechanism is needed to ensure that stakeholders understand the value of the information provided by the XBRL formatted financial reports. Keywords: XBRL, development of capital markets, panel estimation techniques, cross-countries study

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Section: Literature Reviewmentioning

confidence: 99%

The Impact of Adoption of The XBRL on the Development of Stock Markets

Sassi¹,

Othman²,

Hussainey³

2021

APMAJ

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“…Previous researches provide evidence that the cash flow provided information about the company performance that was not included in the current earnings. Abhayawansa et al (2015), Clatworthy and Lee (2017), DeFond and Hung (2003), and Hui et al (2016) showed that demand for cashflow-based models increased when information about earnings was not enough to value the companies. Call et al (2009) also showed that the cash flow estimate was very complex because they involved the use of various information from financial reports, industry data, and macro-economics.…”

Section: Hypothesis 1a (H1a)mentioning

confidence: 99%

“…Analysts are important intermediaries in the capital market because they provide estimated earnings, recommendations, and target price for their clients (Clatworthy & Lee, 2017), their presence considerable as one among many pillars in the efficient capital market (O'Brien et al, 2017). One of the main contents of the analyst report is the target price which shows the analysts' expectations of the stock prices of certain companies within 12 months.…”

Section: Introductionmentioning

confidence: 99%

Analysis of Equity Valuation Models and Target Price Accuracy: An Evidence From Analyst Reports in Indonesia

2020

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This study examines whether investment analysts (sell-side) in Indonesia tend to prefer cash-flow-based valuation models over the accrual-based valuation model, how the accuracy of valuation models are used, and whether the use of both valuation models simultaneously for generating target prices can improve accuracy. The researchers conducted a comprehensive content analysis of 99 equity research reports for most companies listed in the LQ-45 index. The results show that in the accrual-based valuation model, in particular, the ratio of stock price to income (P/E) was the most popular valuation model that appeared in equity reports in all sectors. However, from the perspective of the valuation model as the producer of the target price (dominant valuation), discounted cash flow (DCF) was the most popular valuation model used. It was also found that the cash-flow-based valuation model gave the highest accuracy. In addition, the researchers also found significant results in the Chi-square test which showed the use of both valuation models simultaneously could improve the valuation results more precisely by the analysts. This was in line with the intuition that the accrual concept adds value to the relevance of the information to cash flow.

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“…Among annual report users, financial analysts play an important role in demanding information about company’s performance (e.g., Degeorge et al, 2013; Healy & Palepu, 2001; Yu, 2008). They provide investors with information through their recommendations and interpretations of corporate plans and forecasts (Clatworthy & Lee, 2018). Hence, financial analysts can be representative of the demand for information at firm level (Bozzolan, Cho, & Michelon, 2015).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Analyst Following, Country’s Financial Development, and the Selective Use of Graphical Information in Corporate Annual Reports

Melis

Aresu

2019

International Journal of Business Communication

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This article investigates whether and how the demand for information at country and firm levels affects the selective use of key performance indicators graphs in corporate annual reports. Our study finds that the country-level and firm-level demands for information provide an incentive, rather than a curb, for a selective display of key performance indicators, which is an important concern in corporate communication and reporting. The external pressure from the demand for information seems to encourage, rather than discourage, impression management. We suggest that annual report readers should use graphical information with caution as companies are likely to provide a self-serving, nonneutral, account of their performance in those contexts where the pressure to perform is higher.

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Financial analysts’ role in valuation and stewardship

Cited by 9 publications

References 23 publications

The Impact of Adoption of The XBRL on the Development of Stock Markets

The Impact of Adoption of The XBRL on the Development of Stock Markets

Analysis of Equity Valuation Models and Target Price Accuracy: An Evidence From Analyst Reports in Indonesia

Analyst Following, Country’s Financial Development, and the Selective Use of Graphical Information in Corporate Annual Reports

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