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Investor Protection and Analysts' Cash Flow Forecasts Around the World

57 Pages Posted: 21 Jul 2002  

Mark L. DeFond

University of Southern California - Leventhal School of Accounting

Mingyi Hung

Hong Kong University of Science & Technology (HKUST)

Abstract

We find that analysts are more likely to provide cash flow forecasts in countries with weak investor protection. This finding is consistent with our hypothesis that market participants demand (and analysts supply) cash flow information when weak investor protection results in earnings that are less likely to reflect underlying economic performance. Our results suggest that information intermediaries respond to market-based incentives to attenuate the adverse effects of country-level institutional factors on earnings' usefulness. These findings contribute to the literature by shedding light on the institutional determinants of analysts' research activities, and on the nature of the financial information they generate.

Keywords: international accounting, investor protection, analysts' forecasts, cash flows

JEL Classification: M41, G15

Suggested Citation

DeFond, Mark L. and Hung, Mingyi, Investor Protection and Analysts' Cash Flow Forecasts Around the World. Review of Accounting Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=317305 or http://dx.doi.org/10.2139/ssrn.317305

Mark DeFond

University of Southern California - Leventhal School of Accounting ( email )

Accounting Building, Room 206
Los Angeles, CA 90089-0441
United States
213-740-5016 (Phone)
213-747-2815 (Fax)

Mingyi Hung (Contact Author)

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

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