Research on mergers and hedge funds find that the risk arbitrage spread has contracted. This paper investigates the role financial analysts have on risk arbitrage by comparing mergers where a single analyst covers both the target and the acquirer prior to the deal announcement. We find that...

We extend the literature by investigating whether analysts cater their coverage to investor information demand. Results suggest that analysts' coverage is contemporaneously positively associated with investor information demand, and negatively associated with the previous time periods...