Premium
Exchange‐Sponsored Analyst Coverage
Author(s) -
Gao Ru Tina,
Shivakumar Lakshmanan,
Sidhu Baljit K.
Publication year - 2018
Publication title -
contemporary accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.769
H-Index - 99
eISSN - 1911-3846
pISSN - 0823-9150
DOI - 10.1111/1911-3846.12410
Subject(s) - stock exchange , business , market liquidity , accounting , stock (firearms) , scheme (mathematics) , finance , engineering , mathematics , mechanical engineering , mathematical analysis
Several major stock exchanges, including the NASDAQ and NYSE Euronext, have recently embarked on schemes to sponsor and promote analyst coverage for firms listed on their exchanges. We evaluate the efficacy of one such scheme pioneered by the Singapore Exchange (SGX). We find that sponsored analysts produce forecasts with similar bias, but lower accuracy than those issued by analysts voluntarily following a firm. In analyses that control for self‐selection into the SGX Scheme, we find that sponsored firms enjoy at best minor improvements in their information environments and stock liquidity. Any benefits accruing from the scheme are insufficient to make sponsored firms fully comparable to those of firms with voluntary analyst following on the measured attributes.