Product market competition and analyst following

Syrine Sassi () and Narjess Toumi
Additional contact information
Syrine Sassi: Université Paris Est Créteil
Narjess Toumi: Université Paris Est Créteil

Journal of Management & Governance, 2018, vol. 22, issue 1, No 4, 55-88

Abstract: Abstract In this study, we investigate the link between product market competition and the extent of a firm’s analyst following. Our research is motivated by prior studies on analyst coverage, as well as the literature pertaining to the informational and monitoring role of product market competition. Using a sample of 520 French listed firms over 2000–2013, we find support to the hypothesis that the number of analysts following a firm decreases with the intensification of competition. This result suggests that the disciplinary power of product market competition makes investors more confident that firms are well monitored, which reduces their incentives to seek additional private information produced by financial analysts. In short, our findings corroborate previous evidence that there is a substitution effect between competition and other external corporate governance mechanisms, especially analyst following. Our results also shed more light on how the quality of firms’ monitoring mechanisms and information environment is affected by the intensity of product market competition.

Keywords: Analyst following; Product market competition; Corporate governance; Information asymmetry (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s10997-017-9378-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jmgtgv:v:22:y:2018:i:1:d:10.1007_s10997-017-9378-4

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/10997/PS2

DOI: 10.1007/s10997-017-9378-4

Access Statistics for this article

Journal of Management & Governance is currently edited by Lino Cinquini

More articles in Journal of Management & Governance from Springer, Accademia Italiana di Economia Aziendale (AIDEA) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().