Abstract

http://ssrn.com/abstract=2044548
 
 

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When Do Sell-Side Analyst Reports Really Matter? Shareholder Protection, Institutional Investors and the Informativeness of Equity Research


Daniel Arand


University of Giessen - Department of Financial Services

Alexander Gabriel Kerl


University of Giessen - Department of Financial Services

Andreas Walter


University of Giessen - Department of Financial Services

May 1, 2013

European Financial Management, Forthcoming
Midwest Finance Association 2013 Annual Meeting

Abstract:     
We examine whether the informativeness of sell-side analyst reports depends on the strength of the regulatory environment of a country and the regulatory background of the institutional investors of a company. Our analyses are based on more than 600,000 analyst reports from 2005 through 2010 from eight leading capital markets (the U.S., the EU5, Switzerland and Japan).

Based on both measures that we use to proxy the informativeness of analyst research (i.e., short-term market reaction and forecast errors with respect to corporate earnings and target prices), our results show that the information value of research increases as the level of investor protection increases. This result is robust to different specifications of investor protection. We further demonstrate that analyst forecasts are more (less) valuable when the majority of institutional investors are from strong (weak) investor protection countries.

Number of Pages in PDF File: 48

Keywords: shareholder protection, institutional investors, analyst reports, regulation

JEL Classification: G14, G15, G18, G24, G32

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Date posted: April 24, 2012 ; Last revised: July 23, 2013

Suggested Citation

Arand, Daniel and Kerl, Alexander Gabriel and Walter, Andreas, When Do Sell-Side Analyst Reports Really Matter? Shareholder Protection, Institutional Investors and the Informativeness of Equity Research (May 1, 2013). European Financial Management, Forthcoming; Midwest Finance Association 2013 Annual Meeting. Available at SSRN: http://ssrn.com/abstract=2044548 or http://dx.doi.org/10.2139/ssrn.2044548

Contact Information

Daniel Arand
University of Giessen - Department of Financial Services ( email )
Licher Str, 74
Giessen, 35394
Germany
Alexander Gabriel Kerl (Contact Author)
University of Giessen - Department of Financial Services ( email )
Licher Str, 74
Giessen, 35394
Germany
Andreas Walter
University of Giessen - Department of Financial Services ( email )
Betriebswirtschaftslehre V
Giessen, 35394
Germany
HOME PAGE: http://wiwi.uni-giessen.de/ma/dat/walter/Andreas_Walter/
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