Analyst following and pay-performance sensitivity: evidence from China

Bei Yang, Charles P. Cullinan and Hui Liu

Applied Economics, 2018, vol. 50, issue 37, 4040-4053

Abstract: We examine whether analyst following is associated with pay-performance sensitivity in China. Based on our analyses of 17,020 Chinese firm-years from 2007 to 2015, we find that pay-performance sensitivity is higher when companies are followed by financial analysts. We also find that the analyst following/pay-performance sensitivity relationship is stronger for non-state-owned enterprises (SOEs) than for SOEs. Overall, our results indicate that companies followed by financial analysts exhibit more pay-performance-sensitivity, which is consistent the notion that financial analysts can serve an external monitoring role.

Date: 2018
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DOI: 10.1080/00036846.2018.1441508

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