What is the value of sell-side analysts? Evidence from coverage changes – A discussion

• Published in: Journal of accounting & economics Vol. 60; no. 2-3; pp. 58 - 64
• Main Author: Hansen, Robert S.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.11.2015; Elsevier Sequoia S.A
• Subjects: Common stock; Coverage initiation; Exogenous coverage termination; Financial analysts; Firm value; Information asymmetry; Information management; Investment trusts; Investor recognition; Knowledge management; Rates of return; Security analysts; Studies; Supply & demand; Terminations; Value added; Security analysts; Firm value; Information asymmetry; Investor recognition; G32; Coverage initiation; G14; Exogenous coverage termination; Financial analysts; G29

Li and You (this volume) study public firms’ common stock return reactions to two events: when analysts’ initiate coverage of the firm and when they terminate coverage. They test the returns for evidence of three sources of value added by analysts: (1) more monitoring of the firm, (2) reduced inform...