Please use this identifier to cite or link to this item: 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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