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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...
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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...
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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...
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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....
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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...
Persistent link: https://www.econbiz.de/10013141298
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...
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