Multiple Large Shareholders and Analyst Activities

This paper examines whether analysts’ decisions to follow or visit a firm are affected by a specific governance structure—multiple large shareholders (MLS). Using a sample of 3,369 Chinese firms listed on the Shanghai and Shenzhen stock markets, we compare analyst activities for MLS firms with those for single-large-shareholder firms and find that analysts are more willing to cover/visit firms with MLS. The results are robust after we address endogeneity and sample selection concerns. Further analyses show that the impact of MLS on analyst activities is more prominent when other large shareholders have more power relative to the controlling shareholder, and when MLS represent different types of ownership (state and nonstate). The presence of MLS is also associated with higher analyst forecast quality and more informative analyst reports. Our results imply that analysts not only view MLS as better governance but also acquire more information from firms with MLS