Publication: Does corporate governance quality affect analyst coverage? Evidence from the Institutional Shareholder Services (ISS)
Issued Date
2015-01-01
Resource Type
ISSN
14664291
13504851
13504851
Other identifier(s)
2-s2.0-84916934682
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Mahidol University
Rights Holder(s)
SCOPUS
Bibliographic Citation
Applied Economics Letters. Vol.22, No.4 (2015), 312-317
Suggested Citation
Pandej Chintrakarn, Pornsit Jiraporn, Young Kim, Jang Chul Kim Does corporate governance quality affect analyst coverage? Evidence from the Institutional Shareholder Services (ISS). Applied Economics Letters. Vol.22, No.4 (2015), 312-317. doi:10.1080/13504851.2014.939372 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/35896
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Title
Does corporate governance quality affect analyst coverage? Evidence from the Institutional Shareholder Services (ISS)
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Abstract
© 2014, © 2014 Taylor & Francis. We examine the impact of corporate governance quality on the extent of analyst coverage. The evidence based on nearly 3000 firms indicates that more analysts are likely to cover firms with weaker corporate governance. In particular, as corporate governance quality falls by one SD, analyst following increases by 11.40%. Our evidence is consistent with the notion that poor governance results in a wider divergence between the stock’s market price and the fundamental value. Analysts prefer to cover companies with poor governance because it allows them to generate trading commissions by offering shareholders a particularly compelling story about why a stock’s fundamental value and the current price differ.