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 analyst following resulting from brokerage house mergers. We find that managers respond to the coverage...

We find that analysts are more likely to downgrade stocks when prices approach the 52-week high. The results are stronger for stocks with higher information asymmetry but moderated by analysts' reputation, work experience, and educational background. We also find a strategy that shorts stocks...

We examine the information transmission role of stock recommendation revisions by sell-side security analysts. Revisions are associated with economically insignificant mean price reactions and often piggyback on recent news, events, long-term momentum, and short-run contrarian return predictors,...

This study examines the impact of shared analyst coverage on the comparability of financial statements. Analysts form information expectations based on the portfolio of firms they follow. I document that managers cater to analyst information expectations by increasing the comparability of their...

Putting an end to the “earnings game” requires that CEOs reclaim the initiative by avoiding earnings guidance and managing expectations in such a way that their stocks trade reasonably close to their intrinsic value. In place of earnings forecasts, management should provide information about...

Because uncertainty is high in bad times, investors find it harder to assess firm prospects and, hence, should value analyst output more. However, higher uncertainty makes analysts' tasks harder so it is unclear if analyst output is more valuable in bad times. We find that, in bad times, analyst...

An analysis of about 300000 earnings forecasts, created by 18000 individual forecasters for earnings of over 300 S&P listed firms, shows that these forecasts are predictable to a large extent using a statistical model that includes publicly available information. When we focus on the...

Analysts often update their recommendations following corporate news. Questions have been raised regarding analysts' ability to generate new information beyond recent corporate events. Employing a comprehensive database on corporate news we show that only a small minority of 27.9% of all...

There is a substantial divide between evidence in the empirical literature and survey evidence in the financial press regarding the influence of sell-side analyst recommendations on the trading of mutual funds. While surveys of fund managers suggest that they assign little weight to analyst...

Using a model without conflicts of interest and with identical information available to equity analysts, we show that bias and herding in their stock recommendations occur due to incentives provided by relative performance evaluation and top awards. Furthermore, these incentives also lead to...