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- Title
Do ties still bind? Analyst behaviour after financial restatements.
- Authors
Wu, Yi; Kuang, Yu Flora; Lee, Gladys; Zhai, Kerui
- Abstract
We find that, compared to non‐connected analysts, analysts with professional connections to a coverage firm (i.e., connected analysts) are more likely to continue covering the firm after it issues a restatement. Furthermore, connected analysts are more likely to issue pessimistic earnings forecasts and to downgrade stock recommendations for the firm after its financial restatement. Our results also reveal the costs and benefits associated with connected analysts' pessimism – a reduced market reaction to the analysts' pessimistic research on the restating firm, and a positive effect on the market's perception of the quality of the analysts' research on non‐restating firms.
- Subjects
EARNINGS forecasting; FINANCIAL market reaction; MARKETING research; PESSIMISM
- Publication
Accounting & Finance, 2024, Vol 64, Issue 2, p1361
- ISSN
0810-5391
- Publication type
Article
- DOI
10.1111/acfi.13184