The Interplay Between Bond Analysts and Equity Analysts in Information Provision

Abstract

We explore the interplay between sell-side bond analysts and equity analysts in information provision. We use plausibly exogenous variation in equity analyst coverage to show that bond analysts actively react to the reduction in equity analyst coverage by initiating coverage, issuing more reports, and issuing reports with more pages and larger sizes. Moreover, these reports also have a larger market impact. These effects are more pronounced for firms with less existing bond analyst coverage and firms with management earnings guidance. Overall, our results suggest that bond analysts can causally influence and shape firms’ information environment.

Keywords: Information Provision; Bond Analyst; Equity Analyst; Intermediaries’ Interplay; Information Environment

JEL Classification: G32, G34, M41