Analysts' Selective Coverage And Subsequent Performance of Newly Public Firms  

Oleh:

Das, Somnath ; Guo, Re-Jin ; Huai Zhang

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 61 no. 3 (Jun. 2006), page 1159-1186.
Topik: FIRMS; business forecasts; financial performance; regression analysis; studies; initial public offerings
Fulltext: p 1159.pdf (184.21KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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This study examines the ability of analysts to forecast future firm performance, based on the selective coverage of newly public firms. We hypothesize that the decision to provide coverage contains information about an analyst's underlying expectation of a firm's future prospects. We extract this expectation by obtaining residual analyst coverage from a model of initial analyst following. We document that in the three subsequent years, initial public offerings with high residual coverage have significantly better returns and operating performance than those with low residual coverage. This evidence indicate analysts have superior predictive abilities and selectively provide coverage for firms about which their true expectation are favorable.

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