Abstract

http://ssrn.com/abstract=696441
 
 

References (54)



 
 

Citations (16)



 


 



The Two Faces of Analyst Coverage


John A. Doukas


Old Dominion University - Strome College of Business

Chansog (Francis) Kim


The State University of New York at Stony Brook

Christos Pantzalis


University of South Florida - College of Business Administration

February 16, 2005


Abstract:     
We find that positive excess (strong) analyst coverage is associated with overvaluation and low future returns. This finding is consistent with the view that excessive analyst coverage, driven by investment banking incentives and analyst self-interests, raises investor optimism causing share prices to trade above fundamental value. However, weak analyst coverage causes stocks to trade below fundamental values. This finding indicates that investors tend to believe that these firms are more likely to be plagued by information asymmetries and agency problems. The results remain robust after controlling for the possible endogenous nature of analyst coverage and analysts¿ self-selection bias.

Number of Pages in PDF File: 37

Keywords: Analyst coverage, Mis-pricing

JEL Classification: G10, G11, G12

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Date posted: January 8, 2009  

Suggested Citation

Doukas, John A. and Kim, Chansog (Francis) and Pantzalis, Christos, The Two Faces of Analyst Coverage (February 16, 2005). Available at SSRN: http://ssrn.com/abstract=696441 or http://dx.doi.org/10.2139/ssrn.696441

Contact Information

John A. Doukas
Old Dominion University - Strome College of Business ( email )
2080 Constant Hall
Suite 2080
Norfolk, VA 23529-0222
United States
757-683-5521 (Phone)
HOME PAGE: http://www.efmaefm.org/0DOUKAS/doukas.php
Chansog (Francis) Kim (Contact Author)
The State University of New York at Stony Brook ( email )
Stony Brook, NY 11794
United States
248-525-4051 (Phone)
631-632-9412 (Fax)
Christos Pantzalis
University of South Florida - College of Business Administration ( email )
4202 E. Fowler Avenue, BSN 3403
Department of Finance
Tampa, FL 33620-5500
United States
813-974-3262 (Phone)
813-974-3084 (Fax)
HOME PAGE: http://www.coba.usf.edu/departments/finance/facult
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References:  54
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