Analyst Coverage and Earnings Management: Quasi-Experimental Evidence
Type
conference paper
Date Issued
2013-08-08
Author(s)
Oesch, David
;
Irani, Rustom
Abstract (De)
Do securities analysts serve as effective external monitors, or do they pressure managers to focus on short-term performance? To explore this question, we study how securities analysts influence managers' use of different types of earnings management. To isolate causality, we employ a quasi-experiment that exploits exogenous reductions in stock-level coverage resulting from brokerage house mergers. We find that managers respond to a loss of coverage by decreasing real activities manipulation, while increasing their use of accrual-based earnings management. These effects are attributable to firms with low initial analyst coverage and also vary systematically with proxies for the costs of earnings management. Our causal evidence suggests that managers use real activities manipulation to enhance short-term performance and meet analyst forecasts, effects that are not uncovered when focusing solely on accrual-based earnings management.
Language
German
Keywords
Analyst Coverage
Earnings Management
Real Activities Manipulation
Nat-
ural Experiment
ural Experiment
HSG Classification
not classified
Refereed
No
Book title
2013 Accounting Conference: Cost Management and Earnings Forecasting
Publisher
Temple University
Publisher place
Philadelphia
Start page
48
Event Title
2013 Accounting Conference at Temple University
Event Location
Philadelphia
Subject(s)
Division(s)
Eprints ID
225231
File(s)![Thumbnail Image]()
Name
IraniOesch_AnalystCoverageEarningsManagement.pdf
Size
355.57 KB
Format
Adobe PDF
Checksum (MD5)
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