Analyst coverage, earnings management and financial development: An international study

Abstract : Using data from 21 countries, this paper analyzes the relation among analyst coverage, earnings management and financial development in an international context. We document that the effectiveness of financial analysts as monitors increases with a country's financial development (FD). We find that in high-FD countries, increased within-firm analyst coverage results in less earnings management. Such is not the case in low-FD countries. Our results are economically significant and robust to reverse causality checks. Our findings illustrate one mechanism through which financial development mitigates the cost of monitoring firms and curbs earnings management.
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Submitted on : Saturday, December 15, 2012 - 2:31:07 PM
Last modification on : Monday, February 12, 2018 - 3:36:01 PM

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Hervé Stolowy, Yuan Ding, Thomas Jeanjean, François Degeorge. Analyst coverage, earnings management and financial development: An international study. Journal of Accounting and Public Policy, Elsevier, 2012, pp.NC. ⟨10.1016/j.jaccpubpol.2012.10.003⟩. ⟨hal-00765628⟩

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