Credit rating agencies (CRAs) have considerable privileged access to corporate management and are therefore a potentially important source of information to the equity market. We study how stock analysts incorporate bond ratings in their earnings forecasts. We develop an economic framework for...

Prior literature refers to economic incentives to generate investment banking business and trading commissions as explanations for analyst publication of forecasts of firms' long-term earnings growth (LTG). Prior research also documents wildly optimistic LTG forecasts and a negative relation...

Researchers argue that analysts' information acquisition efforts increase firm value by facilitating monitoring of firms' activities and, thereby, reducing agency costs (e.g., Jensen and Meckling [1976]; Healy and Palepu [2001]). However, prior research provides limited and inconclusive...

Researchers argue that analysts’ information acquisition activities increase firm value through reducing agency costs, i.e., the monitoring effect (Jensen and Meckling 1976; Healy and Palepu 2001). However, the existing empirical evidence on analyst monitoring effect is limited and inconclusive....

Prior literature finds that economic incentives related to generating investment banking business and trading commissions provide the most dominant explanation for variation in analysts' forecasts of firms' long-term earnings growth (LTG). Prior research evidence also indicates that relying on...

Using analysts' multi-period earnings forecasts, this paper investigates whether analyst forecast errors are related to asset growth and, if so, to what extent analysts' optimism for high-growth firms can explain the asset growth anomaly. We find that analyst forecasts are more optimistic for...