Regional Institutions, Financial Analysts and Stock Price Informativeness
Regional Studies, 2017 forthcoming
25 Pages Posted: 21 Feb 2013 Last revised: 22 Aug 2017
Date Written: August 22, 2017
This paper investigates the impact of legal institutions on the external governance role of equity analysts in enhancing the corporate information environment. By analysing a sample of Chinese listed firms between 2003 and 2013, we find that analyst coverage is positively related to stock price informativeness. Firms located in provinces where legal institutions are stronger, as indicated by better development of market intermediaries and lower levies and charges on firms, are less likely to withhold value-relevant information. Financial analysts play a more effective role in improving stock informativeness in provinces with less developed legal institutions.
Keywords: Analyst; China; Legal Institutions; Stock Informativeness
JEL Classification: K00; G14; G30
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