François Degeorge, François Derrien, Ambrus Kecskés, Sébastien Michenaud Do Analysts' Preferences Affect Corporate Policies? (01 Jun 2013) Available at ECGI: http://ecgi.global/working-paper/do-analysts-preferences-affect-corporate-policies
Equity research analysts tend to cover firms about which they have favorable views. We exploit this tendency to infer analysts' preferences for corporate policies from their coverage decisions. We then use exogenous analyst disappearances to examine the effect of these preferences on corporate policies.
After an analyst disappears, firms change their policies in the direction opposite to the analyst's preferences. The influence of analyst preferences on policies is stronger for firms for which analyst coverage is likely to matter more: young firms, and firms with higher market valuations. Our results suggest that firms choose their corporate policies, in part, to be consistent with the preferences of their analysts.
We find that potential conflicts between majority and minority shareholders strongly influence how dividends respond to taxes. Examining the population of firms with proprietary microdata on all family relationships and a million individual tax...Read more
We examine how dividend policy is used to mitigate potential conflicts of interest between majority and minority shareholders in private Norwegian firms. The average payout is 50% higher if the majority shareholder’s equity stake is 55% (high...Read more
Does earnings management, even though legal, hamper investor trust in reported earnings? Or do investors regard earnings management as a way for firms to convey private information, or simply as a neutral feature of financial reporting?
We document a new channel through which a family business group's internal capital market supports its members. Using data from 44 countries, we provide evidence that groups use internal capital to incubate difficult-to-finance investment...Read more