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The Effect Of Analyst Coverage On Accounting Conservatism, Jerry Sun, Guoping Liu
The Effect Of Analyst Coverage On Accounting Conservatism, Jerry Sun, Guoping Liu
Odette School of Business Publications
Purpose – The purpose of this paper is to examine whether high analyst coverage increases or decreases accounting conservatism.
Design/methodology/approach – Sample firms were selected from the Compustat and I/B/E/S databases for years 1989-2006. The authors used both accrual-based and market-value-based measures of accounting conservatism, also the extent to which negative cash flow from operations is more timely recognized via accruals than positive cash flow from operations to measure accounting conservatism. The regression analyses are conducted to test the hypotheses.
Findings – Strong evidence was found that analyst coverage is positively associated with accounting conservatism. The results suggest that firms …