What Is the Value of Sell-Side Analysts? Evidence from Coverage Changes

Li, Kevin K.; You, Haifeng

doi:10.2139/ssrn.2636643

Cited by 3 publications

(1 citation statement)

References 26 publications

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“…Therefore, investor familiarity likely increases with the listing age of a firm. Our third proxy, the number of analyst following (AF), assumes that U.S. investors become more familiar with firms through information disseminated by financial analysts (Li and You 2015). We expect that investor familiarity increases with analyst following.…”

Section: Methodsmentioning

confidence: 99%

The Price of Being Foreign: Stock Market Penalties Associated with Accounting Irregularities for U.S.‐Listed Foreign Firms

Matsumoto

Wang

et al. 2020

Contemporary Accting Res

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We examine the stock market consequences of disclosing accounting irregularities for U.S.‐listed foreign firms. After controlling for the severity of the irregularity and other firm characteristics, we find that foreign firms experience significantly more negative short‐window stock market reactions following irregularity announcements than do U.S. firms. Moreover, for a subsample of 64 irregularities of foreign firms that are listed on both a U.S. and home country stock exchange, we find evidence that restating firms' U.S. investors react more negatively to the same irregularity than their home country investors. This differential market reaction appears related to firm‐specific information risks that are greater for foreign firms than U.S. firms. Collectively, consistent with the reputational bonding hypothesis in prior literature, our results suggest that accounting irregularities cause U.S. investors to reassess the information risk associated with foreign firms.

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Section: Methodsmentioning

confidence: 99%