Open AccessAnalyst Attention and Corporate Financing Constraints: Evidence from China
Author(s) -
Chen Li
Publication year - 2021
Publication title -
bcp business and management
Language(s) - English
Resource type - Journals
ISSN - 2692-6156
DOI - 10.54691/bcpbm.v15i.223
Subject(s) - stock exchange , external financing , internal financing , finance , business , robustness (evolution) , transparency (behavior) , china , corporate finance , panel data , capital market , stock (firearms) , investment decisions , investment (military) , economics , econometrics , information asymmetry , behavioral economics , mechanical engineering , debt , biochemistry , chemistry , politics , political science , law , gene , engineering
This paper explores the effect of analyst coverage on financing constraints by selecting listed companies in the Shanghai Stock Exchange and Shenzhen Stock Exchange as a sample for the study. This research finds that analyst coverage mitigates financing constraints after controlling all other variables that affect both investors’ investment decisions and investee’s financing decisions. This result still holds after the robustness check using pooled OLS model with a fixed-effect model and balanced panel data. Additionally, the heterogeneity analysis implies that analyst coverage is negatively related only to financing constraints that large-size firms encounter, whereas analyst coverage does not ease financing constraints that small-size firms encounter. Overall, the results of the study provide regulators with insights into how to improve the information transparency in the capital market, to help investors make optimal investment decisions, and to facilitate companies’ external financing.