We examine how CEO power affects the extent of analyst coverage. Due to agency conflicts, powerful CEOs may not adopt a disclosure policy that maximizes shareholders’ wealth. The amount of information disclosed by the firm influences the information environment, which affects the financial analyst’s incentives to “cover” or “follow” the firm. Consistent with this notion, we show that firms with powerful CEOs are covered by fewer analysts. In addition, the empirical evidence suggests that analyst coverage helps improve firm value. The positive effect of analyst coverage on firm value, however, is greatly mitigated in firms with powerful CEOs. Strong CEO power appears to counteract the beneficial role of analyst coverage.
Keywords: analyst coverage, analyst following, CEO power, agency theory, agency conflict
학회소식
학회소식
[2011년 제 2차] The Impact of CEO Power on Analyst Following
작성자 : 관리자
조회수 : 808
게시일 :
2011-06-03