Analyst coverage, optimism, and stock price crash risk: Evidence from China

We examine the relations among analyst coverage, analyst optimism, and firm-specific stock price crash risk. Using a unique Chinese database, we find that an increase in a firm's analyst coverage leads to an increase in stock price crash risk and this positive relation is more pronounced when analysts are more optimistic analysts and are affiliated with investment banks and brokerage firms with mutual funds relation. We also find some weak evidence to suggest that analyst optimism on crash risk is less pronounced when analysts have high personal reputations or are affiliated with reputable brokerage firms.