Investor Protection and Analysts' Cash Flow Forecasts Around the World

DeFond, Mark L.; Hung, Mingyi

doi:10.2139/ssrn.317305

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Investor Protection and Analysts' Cash Flow Forecasts Around the World

Review of Accounting Studies, Forthcoming

57 Pages Posted: 21 Jul 2002

See all articles by Mark L. DeFond

Mark L. DeFond

University of Southern California - Leventhal School of Accounting; European Corporate Governance Institute (ECGI)

Mingyi Hung

Hong Kong University of Science & Technology (HKUST)

Abstract

We find that analysts are more likely to provide cash flow forecasts in countries with weak investor protection. This finding is consistent with our hypothesis that market participants demand (and analysts supply) cash flow information when weak investor protection results in earnings that are less likely to reflect underlying economic performance. Our results suggest that information intermediaries respond to market-based incentives to attenuate the adverse effects of country-level institutional factors on earnings' usefulness. These findings contribute to the literature by shedding light on the institutional determinants of analysts' research activities, and on the nature of the financial information they generate.

Keywords: international accounting, investor protection, analysts' forecasts, cash flows

JEL Classification: M41, G15

Suggested Citation: Suggested Citation

DeFond, Mark and Hung, Mingyi, Investor Protection and Analysts' Cash Flow Forecasts Around the World. Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=317305 or http://dx.doi.org/10.2139/ssrn.317305