Are analysts effective speaking tubes? Evidence from site visits
Jun Wang & Chongfeng Wu (2022): Are analysts effective speaking tubes? Evidence from site visits, Applied Economics, DOI: 10.1080/00036846.2022.2083567
31 Pages Posted: 21 Nov 2020 Last revised: 1 Dec 2022
Date Written: July 8, 2022
This paper examines the impact of analyst corporate site visits on stock price crash risk using a unique data set of Chinese A-share stocks listed on the Shenzhen stock exchange (SZSE) over the 2012–2019 period. We find that the frequency of analyst corporate site visits is positively correlated with stock price crash risk, and this positive relationship is mainly significant in the situation that analysts keep silent after visiting. This positive association remains robust after using alternative measures of crash risk and analyst silence. The results still hold after re-estimating our regression using the Heckman self-selection model to control for selection bias. Finally, we find that analyst silence, which happens after visits participated by more than one brokerage, star analysts, or fund companies, has a more significant impact on stock price crash risk.
Keywords: analyst behavior, crash risk, hidden information, conflict of interest
JEL Classification: G14, G24
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