Who’s heard on the Street? Determinants and consequences of financial analyst coverage in the business press

Who’s heard on the Street? Determinants and consequences of financial analyst coverage in the... This study examines the determinants of financial analyst coverage in the business press and the effects of such coverage on analysts’ careers. Using a sample of business press articles that quote a financial analyst, we compare each cited analyst with the other analysts who were actively following the same firm and could have been cited by the reporter but were not. In general, we find that analysts quoted in the business press are more likely to possess characteristics that prior research has found to be positively associated with analyst quality and that higher quality analysts are allotted more space in the articles. However, we cannot rule out the possibility that at least some of our analyst quality measures capture the effects of familiarity. After controlling for analyst quality and article tone, we find that analysts with unfavorable stock recommendations are more likely to be cited than analysts with favorable recommendations. We provide evidence of significant career benefits for analysts who receive publicity in the business press, which suggests that the press is a source of valuable exposure for analysts. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Who’s heard on the Street? Determinants and consequences of financial analyst coverage in the business press

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Publisher
Springer Journals
Copyright
Copyright © 2014 by Springer Science+Business Media New York
Subject
Economics / Management Science; Accounting/Auditing; Finance/Investment/Banking; Public Finance & Economics
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1007/s11142-014-9298-3
Publisher site
See Article on Publisher Site

Abstract

This study examines the determinants of financial analyst coverage in the business press and the effects of such coverage on analysts’ careers. Using a sample of business press articles that quote a financial analyst, we compare each cited analyst with the other analysts who were actively following the same firm and could have been cited by the reporter but were not. In general, we find that analysts quoted in the business press are more likely to possess characteristics that prior research has found to be positively associated with analyst quality and that higher quality analysts are allotted more space in the articles. However, we cannot rule out the possibility that at least some of our analyst quality measures capture the effects of familiarity. After controlling for analyst quality and article tone, we find that analysts with unfavorable stock recommendations are more likely to be cited than analysts with favorable recommendations. We provide evidence of significant career benefits for analysts who receive publicity in the business press, which suggests that the press is a source of valuable exposure for analysts.

Journal

Review of Accounting StudiesSpringer Journals

Published: Jun 21, 2014

References

  • All that glitters: The effect of attention and news on the buying behavior of individual and institutional investors
    Barber, B; Odean, T
  • The financial reporting environment: Review of the recent literature
    Beyer, A; Cohen, D; Lys, T; Walther, B
  • Investor reaction to celebrity analysts: The case of earnings forecast revisions
    Bonner, S; Hugon, A; Walther, B
  • The role of the business press as an information intermediary
    Bushee, B; Core, J; Guay, W; Hamm, S
  • Stock price reaction to news and no-news: Drift and reversal after headlines
    Chan, W
  • Analyst forecast accuracy: Do ability, resources, and portfolio complexity matter?
    Clement, M
  • Financial analyst characteristics and herding behavior in forecasting
    Clement, M; Tse, S
  • Do initial public offering firms purchase analyst coverage with underpricing?
    Cliff, M; Denis, D
  • The power of the pen and executive compensation
    Core, J; Guay, W; Larcker, D
  • The corporate governance role of the media: Evidence from Russia
    Dyck, A; Volchkova, N; Zingales, L

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