Monitoring and corporate disclosure: Evidence from a natural experiment |
| |
Authors: | Rustom M. Irani David Oesch |
| |
Affiliation: | 1. College of Business, University of Illinois at Urbana-Champaign, 444 Wohlers Hall, 1206 South Sixth Street, Champaign, IL 61820, USA;2. Swiss Institute of Banking and Finance, University of St. Gallen, Rosenbergstrasse 52, CH-9000, St. Gallen, Switzerland |
| |
Abstract: | 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 than estimates from ordinary least squares regressions that do not account for the endogeneity of coverage. Overall, our results suggest that security analysts monitor managers and entrenched managers adopt less informative disclosure policies in the absence of such scrutiny. |
| |
Keywords: | Analyst coverage Corporate governance Reporting decisions |
本文献已被 ScienceDirect 等数据库收录! |
|