The Real Effects of Financial Shocks: Evidence from Exogenous Changes in Analyst Coverage - Archive ouverte HAL Access content directly
Journal Articles Journal of Finance Year : 2013

The Real Effects of Financial Shocks: Evidence from Exogenous Changes in Analyst Coverage

(1) , (2)
1
2

Abstract

We study the causal effects of analyst coverage on corporate investment and financing policies. We hypothesize that a decrease in analyst coverage increases information asymmetry and thus increases the cost of capital; as a result, firms decrease their investment and financing. We use broker closures and broker mergers to identify changes in analyst coverage that are exogenous to corporate policies. Using a difference-in-differences approach, we find that firms that lose an analyst decrease their investment and financing by 1.9% and 2.0% of total assets, respectively, compared to similar firms that do not lose an analyst.

Dates and versions

hal-00852356 , version 1 (20-08-2013)

Identifiers

Cite

François Derrien, Ambrus Kecskés. The Real Effects of Financial Shocks: Evidence from Exogenous Changes in Analyst Coverage. Journal of Finance, 2013, 68 (4), pp.1407-1440. ⟨10.1111/jofi.12042⟩. ⟨hal-00852356⟩

Collections

HEC CNRS
836 View
0 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More