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Do Corporate Governance Analysts Matter? Evidence from the Expansion of Governance Analyst Coverage
Author(s) -
LEHMANN NICO
Publication year - 2019
Publication title -
journal of accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 6.767
H-Index - 141
eISSN - 1475-679X
pISSN - 0021-8456
DOI - 10.1111/1475-679x.12254
Subject(s) - corporate governance , accounting , business , shock (circulatory) , dissemination , market liquidity , capital market , quality (philosophy) , value (mathematics) , finance , political science , medicine , philosophy , epistemology , machine learning , computer science , law
T his paper examines the economic consequences of the initiation of governance analyst coverage. Governance analysts process, enhance, and disseminate governance‐related information to capital market participants via, for example, governance reports and ratings. Using an exogenous shock in the United Kingdom, I find that an increase in governance analyst coverage results in increased governance quality, improved liquidity, increased financial analyst following, and improved investor breadth. These findings are consistent with governance analysts creating value for firms via monitoring, information dissemination/production, and investor recognition.