Does analyst following restrain tunneling? Evidence from brokerage closures and mergers

Kaijuan Gao, Yiran Shen and Kam C. Chan

Finance Research Letters, 2021, vol. 41, issue C

Abstract: We examine the impact of analyst following on tunneling using a sample of Chinese firms. Our findings suggest that, after brokerage closures and mergers, tunneling increases for firms with reduced analyst following. Additional analyses suggest that when a firm has severe agency problems (in terms of a large divergence of ownership and control or more related-party transactions) or a poor information environment (in terms of high earnings management), the impact of a reduction of analyst following on the increase in tunneling is more salient.

Keywords: analyst monitoring; tunneling; brokerage closure and merger (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316639

DOI: 10.1016/j.frl.2020.101849

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