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https://hdl.handle.net/10356/83317
Title: | How does analysts' forecast quality relate to corporate investment efficiency? | Authors: | Chen, Jonas Tao Xie, Lingmin Zhang, Yuanyuan |
Keywords: | Investment efficiency Over-investment |
Issue Date: | 2017 | Source: | Chen, T., Xie, L., & Zhang, Y. (2016). How does analysts' forecast quality relate to corporate investment efficiency? Journal of Corporate Finance, 43, 217-240. | Series/Report no.: | Journal of Corporate Finance | Abstract: | We examine the impact of financial analysts on the efficiency of firms’ investment decisions. We use the accuracy and dispersion of financial analysts’ earnings forecasts as proxies of analyst expertise and quality in making forecasts. We find that high quality forecast is associated with higher investment if the firm is more likely to under-invest and lower investment if the firm is more likely to over-invest, suggesting that forecast quality increases firm-level investment efficiency. We further show that such effects are stronger for the firms with higher information asymmetry and lower institutional stock ownership. The results are consistent with the notion that higher quality of analyst forecasts increases the information environment and external monitoring, which in turn increases investment efficiency. | URI: | https://hdl.handle.net/10356/83317 http://hdl.handle.net/10220/42531 |
ISSN: | 0929-1199 | DOI: | 10.1016/j.jcorpfin.2016.12.010 | Schools: | Nanyang Business School | Rights: | © 2017 Elsevier B. V. This is the author created version of a work that has been peer reviewed and accepted for publication by Journal of Corporate Finance, Elsevier. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [http://dx.doi.org/10.1016/j.jcorpfin.2016.12.010]. | Fulltext Permission: | open | Fulltext Availability: | With Fulltext |
Appears in Collections: | NBS Journal Articles |
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How does analysts’ forecast quality relate to corporate investment efficiency.pdf | 759.28 kB | Adobe PDF | View/Open |
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