Does Analyst Coverage Reduce the Accounting Information Risk of Listed Companies?——Evidence from Chinese Capital Market

Abstract

Abstract:

As information intermediaries and external monitors in capital markets, analysts play an important role in information transition. Based on financial data of China's listed companies from 2005 to 2015, this paper focuses on the research question of whether analyst coverage reduces the risk of accounting information. We find that the risk of earnings management information and fundamental information is negatively associated with financial analyst coverage. This indicates that security analysts' following behavior can effectively detect the material risk in accounting information. Our results provide empirical evidence on the monitoring effect of analysts. This study not only extends existing researches of detecting risk in financial reporting, but also emphasizes the crucial impacts of intermediaries on capital markets as part of the market monitoring mechanism.

Key words: analyst coverage, earnings management, information risk

Hu Weijia, Han Lirong. Does Analyst Coverage Reduce the Accounting Information Risk of Listed Companies?——Evidence from Chinese Capital Market[J]. , 2020, 32(4): 219-230.

References

[1] 胡奕明. 证券分析师研究报告:市场信息的解读[M]. 北京:清华大学出版社, 2005
[2] 崔玉英,李长青,郑燕,等. 公司成长、盈余波动与财务分析师跟踪——来自中国证券市场的经验证据[J]. 管理评论, 2014,26(4):60-72
[3] 李双燕. 中国在美上市企业的盈利表现受国际分析师关注度的影响吗?[J]. 管理评论, 2016,28(6):42-51
[4] Brown L., Call A., Clement M., et al. Inside the "Black Box" of Sell-side Financial Analysts[J]. Journal of Accounting Research, 2015,53(1):1-47
[5] 方先明,汤泓. 股票分析师报告有效吗?[J]. 中国经济问题, 2016,(5):110-124
[6] Cotter J., Young S. M. Do Analysts Anticipate Accounting Fraud?[R]. SSRN Working Paper, 2007
[7] 吴武清,揭晓小,苏子豪. 信息不透明、深度跟踪分析师和市场反应[J]. 管理评论, 2017,29(11):171-182
[8] Guay W. R., Kothari S. P., Watts R. L. A Market-based Evaluation of Discretionary Accrual Models[J]. Journal of Accounting Research, 1996,34:83-105
[9] Wu S., Wang Y., Wu L., et al. State Ownership and the Market Pricing of Accruals Quality[J]. China Journal of Accounting Studies, 2017,5(2):155-172
[10] Li K. K., You H. What Is the Value of Sell-side Analysts? Evidence from Coverage Initiations and Terminations[J]. Journal of Accounting & Economics, 2015,60(2-3):141-160
[11] 李双燕. 中国在美上市企业的盈利表现受国际分析师关注度的影响吗?[J]. 管理评论, 2016,28(6):42-51
[12] 胡玮佳,韩丽荣. 分析师关注度、机构持股比与会计信息披露——基于相续Logit模型的回归分析[J]. 财经问题研究, 2016,(6):90-101
[13] Keune M. B., Johnstone K. M. Materiality Judgments and the Resolution of Detected Misstatements:The Role of Managers, Auditors, and Audit Committees[J]. The Accounting Review, 2012,87(5):1641-1677
[14] Hazarika S., Karpoff J. M., Nahata R. Internal Corporate Governance, CEO Turnover, and Earnings Management[J]. Journal of Financial Economics, 2012,104(1):44-69
[15] Huang S. X., Pereira R., Wang C. Analyst Coverage and the Likelihood of Meeting or Beating Analyst Earnings Forecast[J]. Contemporary Accounting Research, 2017,34(2):871-899
[16] 谢震,熊金武. 分析师关注与盈余管理:对中国上市公司的分析[J]. 财贸研究, 2014,25(2):139-149
[17] He J., Tian X. The Dark Side of Analyst Coverage:The Case of Innovation[J]. Journal of Financial Economics, 2013,109(3):856-878
[18] Jensen M. C., Meckling W. H. Theory of the Firm:Managerial Behavior, Agency Costs and Ownership Structure[J]. Journal of Financial Economics, 1976,3(4):305-360
[19] Yu F. F. Analyst Coverage and Earnings Management[J]. Journal of Financial Economics, 2008,88(2):245-271
[20] Dyck A., Morse A., Zingales L. Who Blows the Whistle on Corporate Fraud?[J]. Journal of Finance, 2010,65(6):2213-2253
[21] Chen T., Harford J., Lin C. Do Analysts Matter for Governance? Evidence from Natural Experiments[J]. Journal of Financial Economics, 2015,115(2):383-410
[22] Degeorge F., Ding Y., Jeanjean T., et al. Analyst Coverage, Earnings Management and Financial Development:An International Study[J]. Journal of Accounting and Public Policy, 2013,32(1):1-25
[23] Knyazeva D. Corporate Governance, Analyst Following, and Firm Behavior[R]. Working Paper, New York University, 2007
[24] Sun J., Liu G. Does Analyst Coverage Constrain Real Earnings Management?[J]. The Quarterly Review of Economics and Finance, 2016,59(2):131-140
[25] 李春涛,赵一,徐欣,等. 按下葫芦浮起瓢:分析师跟踪与盈余管理途径选择[J]. 金融研究, 2016,(4):144-157
[26] Jones K. L., Krishnan G. V., Melendrez K. D. Do Models of Discretionary Accruals Detect Actual Cases of Fraudulent and Restated Earnings? An Empirical Analysis[J]. Contemporary Accounting Research, 2008,25(2):499-531
[27] Jones J. Earnings Management during Import Relief Investigations[J]. Journal of Accounting Research, 1991,29(2):193-228
[28] Dechow P. M., Sloan R. G., Sweeney A. P. Detecting Earnings Management[J]. The Accounting Review, 1995,70(2):193-225
[29] Dechow P. M., Dichev I. D. The Quality of Accruals and Earnings:The Role of Accrual Estimation Errors[J]. The Accounting Review, 2002,77(s-1):35-59
[30] McNichols M. F. Discussion of the Quality of Accruals and Earnings:The Role of Accrual Estimation Errors[J]. The Accounting Review, 2002,77(s-1):61-69
[31] Beneish M. D. The Detection of Earnings Manipulation[J]. Financial Analysts Journal, 1999,55(5):24-36
[32] Francis J., LaFond R., Olsson P., et al. The Market Pricing of Accruals Quality[J]. Journal of Accounting and Economics, 2005,39(2):295-327
[33] 曾雪云,陆正飞. 盈余管理信息风险, 业绩波动与审计意见——投资者如何逃离有重大盈余管理嫌疑的上市公司?[J]. 财经研究, 2016,42(8):133-144
[34] Belsley D. A., Kuh E., Welsch R. E. Detecting and Assessing Collinearity[A]. Regression Diagnostics:Identifying Influential Data and Sources of Collinearity[C]. New York:John Wiley & Sons, 1980