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

@article{Derrien2013TheRE,
  title={The Real Effects of Financial Shocks: Evidence from Exogenous Changes in Analyst Coverage},
  author={F. Derrien and Ambrus Kecsk{\'e}s},
  journal={Journal of Finance},
  year={2013},
  volume={68},
  pages={1407-1440}
}
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… Expand
249 Citations

Figures and Tables from this paper

Analyst Coverage and the Quality of Corporate Investment Decisions
  • 18
  • Highly Influenced
  • PDF
Under Pressure: The Causal Effect of Financial Analyst Coverage on Long-Term Capital Investments
  • 3
  • Highly Influenced
  • PDF
Analyst Coverage and Real Earnings Management: Quasi-Experimental Evidence
  • 86
  • Highly Influenced
  • PDF
Stock Analysts and Corporate Social Responsibility
  • 3
Investment and financial constraints: Does analyst coverage matter?
  • Highly Influenced
...
1
2
3
4
5
...