Does shareholder protection affect the performance of analysts as a gatekeeper?

Christopher Koch (), Ola Nilsson () and Katarina Eriksson ()

Journal of Management & Governance, 2014, vol. 18, issue 2, 315-345

Abstract: This paper investigates the effect of shareholder protection on analysts’ performance. The important corporate governance role analysts can play by monitoring management has largely been ignored in the literature. Using a newly constructed index, we are for the first time able to analyse how changes in shareholder protection over time affect analysts’ performance as a gatekeeper. We find that strengthened shareholder protection improves analysts’ performance as a gatekeeper, i.e. analysts’ ability to reduce information asymmetry improves with strengthened shareholder protection. However, we also find a substitution effect: Strengthened shareholder protection makes analysts’ services less valuable to investors, thereby leading to a reduction in the number of analysts following firms. Copyright Springer Science+Business Media, LLC. 2014

Keywords: Shareholder protection; Analysts; Cross-section; Forecast accuracy; Forecast bias; Forecast dispersion; Panel (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10997-012-9227-4

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