Monitoring and Corporate Disclosure : Evidence from a Natural Experiment ∗

  title={Monitoring and Corporate Disclosure : Evidence from a Natural Experiment ∗},
  author={R. Irani and David Oesch},
Using an experimental design that exploits exogenous reductions in coverage resulting from brokerage house mergers, we find that a reduction in coverage causes a deterioration in financial reporting quality. The effect of coverage on disclosure is more pronounced for firms with weak shareholder rights, consistent with a substitution effect between analyst monitoring and other corporate governance mechanisms. The effects we uncover using our experimental design are an order of magnitude larger… CONTINUE READING


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