Cover Me: Managers' Response to Decreases in Analyst Coverage*
Rutgers, The State University of New Jersey - Accounting & Information Systems
University of Texas at Dallas
AAA 2009 Financial Accounting and Reporting Section (FARS) Paper
We show that managers increase the volume of public financial guidance in response to decreases in analyst coverage of their firms. This result is driven by the post-Regulation Fair Disclosure period, and is stronger for firms with higher sales growth and firms with lower resulting levels of coverage. On the other hand, managers' guidance response to increases in analyst coverage is generally smaller and less significant. Our results suggest that managers perceive analyst coverage to be valuable and that they expend resources to attract and maintain a certain level of analyst coverage.
Number of Pages in PDF File: 47
Keywords: Analyst coverage, managerial guidanceworking papers series
Date posted: September 11, 2008
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