Please use this identifier to cite or link to this item: https://hdl.handle.net/10356/100531
Title: Analysts' selective coverage and subsequent performance of newly public firms
Authors: Das, Somnath
Guo, Re-Jin
Zhang, Huai
Issue Date: 2006
Source: Das, S., Guo, R. J., & Zhang, H. (2006). Analysts' Selective Coverage and Subsequent Performance of Newly Public Firms. The Journal of Finance, 61(3), 1159-1185.
Series/Report no.: The journal of finance
Abstract: This study examines the ability of financial analysts to forecast future firm performance, based on their selective coverage of newly public firms. We hypothesize that the decision by analysts to provide coverage contains information about their true underlying expectation of the future prospects of firms. We extract this underlying expectation, which is otherwise unobservable, by obtaining residual analyst coverage from a model of initial analyst following for newly public firms. Our results demonstrate that in the three years subsequent to initial coverage, IPOs with high residual coverage have significantly better return and operating performance than those with low residual coverage. This evidence is consistent with analysts’ having superior predictive abilities and selectively providing coverage for firms about which their true expectations are favorable.
URI: https://hdl.handle.net/10356/100531
http://hdl.handle.net/10220/18139
DOI: http://dx.doi.org/10.1111/j.1540-6261.2006.00869.x
Rights: © 2006 John Wiley & Sons, Inc.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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