The Monitoring Role of Financial Analysts: An International Evidence

Ahmed Marhfor¹, Rachid Ghilal², Bouchra M’Zali³

¹University of Quebec in Abitibi-Témiscamingue (UQAT), Rouyn-Noranda, Canada.
²University of Quebec in Rimouski (UQAR), Lévis, Canada.
³University of Quebec in Montréal (UQAM), Montréal, Canada.

DOI: 10.4236/ajibm.2015.55027                

Abstract

This study investigates whether high analyst coverage improves the quality of reported accounting numbers. Using conservatism in financial reporting as a proxy for the quality of reported earnings, we find evidence that analysts’ activities are not positively associated with accounting conservatism. The findings indicate that firms choose less conservative accounting methods when they are covered by more analysts. They are consistent with the notion that analysts’ activities do not substitute for other corporate governance mechanisms.

Keywords

Analyst Coverage, Accounting Conservatism, Corporate Governance, Earnings Recognition

Conflicts of Interest

The authors declare no conflicts of interest.

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