Complexity and Analyst Following of Multinational Firms

23 Pages Posted: 16 May 2000  

Julia Grant

Case Western Reserve University - Department of Accountancy

Robert J. Bricker

Case Western Reserve University - Department of Accountancy

Timothy J. Fogarty

Case Western Reserve University - Department of Accountancy

Gary Previts

Case Western Reserve University - Department of Accountancy

Date Written: January 2000

Abstract

This research studies the association between multinational firm complexity and analyst following. We first present a model of a firm?s operational complexity in terms of its lines of business and geographic operating regions, considered separately, jointly, and interactively, including a measure of operating segment complexity incorporating both line of business and geographic region information. Using ordinary least squares regression, we empirically measure the relationship between firm complexity and analyst following, controlling for firm size, risk, and ownership structure. Our analysis of about 250 firms is consistent with our hypothesis of a negative association between firm complexity and analyst following. Results on the interactive variable, operating segment complexity, are negative and significantly associated with analyst following. However, this model does not improve on those including lines of business and geographic operating regions separately and jointly. Our findings add to our understanding of the role of complexity in affecting analyst following of multinational firms, and have implications for segment reporting under SFAS 131.

JEL Classification: G29, M41, M45

Suggested Citation

Grant, Julia and Bricker, Robert J. and Fogarty, Timothy J. and Previts, Gary, Complexity and Analyst Following of Multinational Firms (January 2000). Available at SSRN: https://ssrn.com/abstract=220421 or http://dx.doi.org/10.2139/ssrn.220421

Julia Grant

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
216-368-4158 (Phone)
216-368-4776 (Fax)

Robert J. Bricker (Contact Author)

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
(216) 368-5355 (Phone)
(216) 368-4776 (Fax)

Timothy J. Fogarty

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
216-368-3938 (Phone)
216-368-4776 (Fax)

Gary J. Previts

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
216-368-2074 (Phone)
216-368-4776 (Fax)

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