Under watchful eyes: Analyst site visits and firm earnings management

Zhan Gao, Xiaofeng Quan and Xingmei Xu

International Review of Financial Analysis, 2022, vol. 83, issue C

Abstract: This paper investigates whether analyst site visits, where sell-side analysts visit corporate sites and interact with management, reduce earnings management by host firms. Taking advantage of the disclosure of analyst site visits by Chinese listed firms, we find that the intensity of analyst site visits is negatively associated with discretionary accruals, and this relation is robust to controlling for endogeneity. Furthermore, we find that site visits attended by star analysts and including factory tours are associated with lower levels of discretionary accruals than those without these features. We also report that the number and coverage of questions posed during site visits are negatively associated with discretionary accruals. Our results demonstrate that site visits by sell-side analysts perform a vital monitoring role and exert significant constraints on firms' opportunistic financial reporting.

Keywords: Sell-side analysts; Site visits; Earnings management; External monitoring (search for similar items in EconPapers)
JEL-codes: G24 G34 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:83:y:2022:i:c:s1057521922002265

DOI: 10.1016/j.irfa.2022.102269

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