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The Great Sell-Side Sell-Off: Evidence Of Declining Financial Analyst Coverage, Barry Hettler, Justyna Skomra, Arno Forst
The Great Sell-Side Sell-Off: Evidence Of Declining Financial Analyst Coverage, Barry Hettler, Justyna Skomra, Arno Forst
School of Accountancy Faculty Publications and Presentations
Purpose
Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether financial analyst coverage declined over the past decade and if any loss of analyst coverage is associated with a change in forecast accuracy.
Design/methodology/approach
After investigating, and confirming, a general decline in analyst following, the authors calculate the loss of analyst coverage relative to the firm-specific maximum between 2009 and 2013. In multivariate analyses, the authors then examine whether this loss of coverage differs across geographic region, firm size and capital market development, and whether it …