TY - JOUR
T1 - Does corporate governance quality affect analyst coverage? Evidence from the Institutional Shareholder Services (ISS)
AU - Chintrakarn, Pandej
AU - Jiraporn, Pornsit
AU - Kim, Young
AU - Kim, Jang Chul
PY - 2015/3/4
Y1 - 2015/3/4
N2 - We examine the impact of corporate governance quality on the extent of analyst coverage. The evidence based on nearly 3000 firms indicates that more analysts are likely to cover firms with weaker corporate governance. In particular, as corporate governance quality falls by one SD, analyst following increases by 11.40%. Our evidence is consistent with the notion that poor governance results in a wider divergence between the stock’s market price and the fundamental value. Analysts prefer to cover companies with poor governance because it allows them to generate trading commissions by offering shareholders a particularly compelling story about why a stock’s fundamental value and the current price differ.
AB - We examine the impact of corporate governance quality on the extent of analyst coverage. The evidence based on nearly 3000 firms indicates that more analysts are likely to cover firms with weaker corporate governance. In particular, as corporate governance quality falls by one SD, analyst following increases by 11.40%. Our evidence is consistent with the notion that poor governance results in a wider divergence between the stock’s market price and the fundamental value. Analysts prefer to cover companies with poor governance because it allows them to generate trading commissions by offering shareholders a particularly compelling story about why a stock’s fundamental value and the current price differ.
UR - http://www.scopus.com/inward/record.url?scp=84916934682&partnerID=8YFLogxK
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U2 - 10.1080/13504851.2014.939372
DO - 10.1080/13504851.2014.939372
M3 - Article
AN - SCOPUS:84916934682
SN - 1350-4851
VL - 22
SP - 312
EP - 317
JO - Applied Economics Letters
JF - Applied Economics Letters
IS - 4
ER -