The Impact of Analyst Following on Stock Prices and the Implications for Firms' Disclosure Policies

JOURNAL OF ACCOUNTING, AUDITING AND FINANCE, Vol 11, No 3, Summer 1996

Posted: 19 May 1998

See all articles by Brett Trueman

Brett Trueman

University of California, Los Angeles (UCLA) - Anderson School of Management

Abstract

This paper shows that there is a positive relation between the number of analysts following a firm and the firm's expected share price. This relation is a direct consequence of market participants' inability to observe the number of informed traders in the market. It is further shown that a firm's manager can have an impact on analyst following by varying the precision of the private information analysts obtain about the firm. In equilibrium, the manager will choose a precision level greater than that which maximizes analyst following, but, in many cases, less than its largest possible value.

JEL Classification: G12, G14

Suggested Citation

Trueman, Brett, The Impact of Analyst Following on Stock Prices and the Implications for Firms' Disclosure Policies. JOURNAL OF ACCOUNTING, AUDITING AND FINANCE, Vol 11, No 3, Summer 1996. Available at SSRN: https://ssrn.com/abstract=2640

Brett Trueman (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
310-825-4720 (Phone)
310-267-2193 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
2,179
PlumX Metrics