Security Analyst Monitoring Activity: Agency Costs and Information Demands

R. Charles Moyer, Robert E. Chatfield and Phillip M. Sisneros

Journal of Financial and Quantitative Analysis, 1989, vol. 24, issue 4, 503-512

Abstract: This paper explores the determinants of monitoring activity provided by security analysts. Jensen and Meckling have argued that analysts play the role of monitors of managerial performance as a means of reducing agency costs of debt and equity. The other major role analysts play is that of making security markets more informationally efficient. The empirical results reported in this paper support the role of analyst monitoring as an efficient device for controlling agency-related costs of debt and equity and as a response to the information demands of investors.

Date: 1989
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