Cover Me: Managers' Response to Decreases in Analyst Coverage*

47 Pages Posted: 11 Sep 2008

See all articles by Divya Anantharaman

Divya Anantharaman

Rutgers, The State University of New Jersey - Accounting & Information Systems

Yuan Zhang

University of Texas at Dallas

Date Written: August 2008

Abstract

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.

Keywords: Analyst coverage, managerial guidance

Suggested Citation

Anantharaman, Divya and Zhang, Yuan, Cover Me: Managers' Response to Decreases in Analyst Coverage* (August 2008). AAA 2009 Financial Accounting and Reporting Section (FARS) Paper. Available at SSRN: https://ssrn.com/abstract=1266362 or http://dx.doi.org/10.2139/ssrn.1266362

Divya Anantharaman

Rutgers, The State University of New Jersey - Accounting & Information Systems ( email )

1 Washington Park
#916
Newark, NJ 07102
United States

Yuan Zhang (Contact Author)

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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