Determinants of Sell-Side Financial Analysts' Use of Non-Financial Information

Abstract

This paper aims to research the context within which sell-side financial analysts make decisions to use corporate non-financial information. Prior research has demonstrated that financial analysts take into account non-financial information in their analyses of firms, but knowledge is scarce about what determines their use of this information. Based on a survey conducted among Belgian financial analysts, we observe a significant negative association between the financial analysts’ use of non-financial information and the earnings informativeness of firm’s financial statement information proxied by leverage and stock return volatility. We also find that a higher amount of non-financial information is used by less experienced financial analysts and by financial analysts covering a higher number of firms.

Keywords: financial analysts, market for information, non-financial information, use of non-financial information