Analyst Following and the Influence of Disclosure Components, Ipos and Ownership Concentration

35 Pages Posted: 22 May 2003

See all articles by Ole-Kristian Hope

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: April 8, 2003

Abstract

Financial analysts serve an important role as intermediaries between firms and investors. In this paper, I investigate factors associated with variations in analyst following using an international sample. Prior research has found that analyst coverage is positively associated with overall firm disclosure. I hypothesize and find that not all forms of disclosure are equally important to analysts. Specifically, controlling for firm- and country-level factors, I document that analyst following is more strongly associated with the extent of note disclosure than the comprehensiveness of the basic financial statements. I further find that analyst following is greater in environments with active IPO markets, suggesting that analysts value the potential for future revenues. Finally, I show that analyst following is negatively related to firm ownership concentration. This is consistent with concentrated ownership changing the nature of the agency problem and reducing the value of analyst-provided services.

Keywords: Analyst following, disclosures, IPO, ownership structure, international

JEL Classification: M41, N20, G29, G24, G32

Suggested Citation

Hope, Ole-Kristian, Analyst Following and the Influence of Disclosure Components, Ipos and Ownership Concentration (April 8, 2003). Available at SSRN: https://ssrn.com/abstract=395800 or http://dx.doi.org/10.2139/ssrn.395800

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

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