The effect of risk disclosure on analyst following

in European Journal of Finance (2020), 26(14), 1355-1376

Prior research shows that financial analysts play an important information intermediary role in France. This study extends earlier research to examine the effect of risk disclosure on the number of ... [more ▼]

Prior research shows that financial analysts play an important information intermediary role in France. This study extends earlier research to examine the effect of risk disclosure on the number of analysts following listed firms. Using a unique dataset of French firms on the 120 SBF index over 2007−2015, the results show a positive and significant relation between risk disclosure and analyst following, suggesting that firms having greater risk disclosure attract more financial analysts. These findings provide empirical support to the argument that analysts incur lower costs of information gathering in firms with greater risk disclosure. The demand for analyst services is also more valuable in these firms, given their potentially high exposure to risks, implying greater analyst following. Overall, our results are in line with prior literature highlighting that analysts’ activities complement annual report disclosures and, generally, corporate disclosures. [less ▲]

Risk disclosure and analyst following: a study of French listed firms

in European Journal of Finance (2020), 26(14), 1355-1376

Prior research shows that financial analysts play an important information intermediary role in France. This study extends earlier research to examine the effect of risk disclosure on the number of ... [more ▼]

Prior research shows that financial analysts play an important information intermediary role in France. This study extends earlier research to examine the effect of risk disclosure on the number of analysts following listed firms. Using a unique dataset of French firms on the 120 SBF index over 2007−2015, the results show a positive and significant relation between risk disclosure and analyst following, suggesting that firms having greater risk disclosure attract more financial analysts. These findings provide empirical support to the argument that analysts incur lower costs of information gathering in firms with greater risk disclosure. The demand for analyst services is also more valuable in these firms, given their potentially high exposure to risks, implying greater analyst following. Overall, our results are in line with prior literature highlighting that analysts’ activities complement annual report disclosures and, generally, corporate disclosures. [less ▲]

Effect of firm regulatory focus on risk disclosure: Evidence from UK strategic reports

Scientific Conference (2019, August 29)

Risk disclosure and analyst following:A study of French listed firms

Scientific Conference (2018, December 17)

In this study, we examine the effect of risk disclosure on the number of analysts following a firm using a sample of non financial and non utilities listed companies belonging to the 120 SBF index over ... [more ▼]

In this study, we examine the effect of risk disclosure on the number of analysts following a firm using a sample of non financial and non utilities listed companies belonging to the 120 SBF index over the period 2007−2015. We also investigate the role that information asymmetry plays in this relationship. Our results show a positive and significant association between risk disclosure and analyst following, suggesting that firms providing higher risk disclosure attract more analysts, probably because of the low cost of gathering information on more transparent firms. However, a high degree of information asymmetry mitigates this positive effect, indicating that risk disclosure may not be a sufficient incentive for analyst following. Thus, although the analyst works as an information intermediary, the high information asymmetry seems to act as a burden making the cost of following those high risk disclosure firms outweighing the benefits associated with it. [less ▲]