Do Analysts Cater to Investor Information Demand?

26 Pages Posted: 13 Nov 2019

See all articles by Md Miran Hossain

Md Miran Hossain

Florida Atlantic University

Benjamin Jansen

Middle Tennessee State University - Department of Economics and Finance

Jon Taylor

Florida Atlantic University - Finance

Date Written: November 4, 2019

Abstract

We extend the literature by investigating whether analysts cater their coverage to investor information demand. Results suggest that analysts’ coverage is contemporaneously positively associated with investor information demand, and negatively associated with the previous time periods information demand. However, the magnitude of the contemporaneous positive association is greater than the magnitude of the proceeding negative association. This implies analyst following significantly increases on firms which have more retail and institutional information demand, but partially revert their coverage after the information demand shock. Furthermore, results suggest that analysts cater their coverage more towards institutional investors, relative to retail investors. These results suggest that analysts focus their coverage on companies that have garnered the most interest from investors, thus potentially maximizing the utility of the information the analyst disseminates.

Keywords: Analyst Coverage; Information Demand; Institutional Investor; Retail Investor

JEL Classification: G14; G23; G24; G29

Suggested Citation

Hossain, Md Miran and Jansen, Benjamin and Taylor, Jon, Do Analysts Cater to Investor Information Demand? (November 4, 2019). Available at SSRN: https://ssrn.com/abstract=3480609 or http://dx.doi.org/10.2139/ssrn.3480609

Md Miran Hossain

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Benjamin Jansen (Contact Author)

Middle Tennessee State University - Department of Economics and Finance ( email )

Murfreesboro, TN 37132
United States

Jon Taylor

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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