Corporate Reputation And Analyst Coverage: Evidence From Europe

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Omar Farooq

Keywords

Corporate Reputation, Analyst Coverage

Abstract

Does corporate reputation affect analyst’s decision to cover a firm? This paper uses the data from Europe (Czech Republic, Denmark, Finland, France, Germany, Greece, Italy, Norway, Poland, Russia, Spain, Sweden, and Turkey) to show that analyst coverage is an increasing function of corporate reputation during the period between 2008 and 2013. Our results are consistent with Gabbioneta et al. (2007) who show that corporate reputation increases the emotional appeal of a firm in the eyes of analysts. Furthermore, we also argue that investors are interested in firms with better reputation. It is, therefore, possible that investors demand analyst research for more these firms, thereby resulting in higher analyst coverage for these firms. Our results are robust in different sub-samples and in different estimation procedures.

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