| Author: | Yoo, Jihye |
| Title: | Information externality of paid-for-analysts |
| Advisors: | Tsang, Albert (AF) |
| Degree: | M.Phil. |
| Year: | 2021 |
| Subject: | Financial instruments -- European Union countries Investment analysis Hong Kong Polytechnic University -- Dissertations |
| Department: | School of Accounting and Finance |
| Pages: | vi, 42 pages : color illustrations |
| Language: | English |
| Abstract: | The implementation of the Markets in Financial Instruments Directive II (MiFID II) in 2018 has increased demand for paid analysts' research service in Europe. In this research, using a hand-collected dataset of the paid analysts' research service in Europe and employing a difference-in-differences research design, I find that financial analysts tend to make more accurate earnings forecasts for non-paying firms in the same industry of their paying firms than non-paying firms in the different industry after they are appointed as paid-for-analysts by the paying firms for their service. I also find that relative to non-paying firms with a better information environment, non-paying firms with weaker information environments tend to exhibit a greater level of improvement in analyst earnings forecast accuracy after the appointment of the analysts for their research services. Similarly, I also find that paid-foranalysts tend to cover more non-paying firms in the same industry of their paying firms after their appointment of paid-for-analysts. Overall, the findings of this study are consistent with the conjecture that paid-for-analysts' greater level of access to paying firms' private information facilitates their earnings forecasts of non-paying firms. |
| Rights: | All rights reserved |
| Access: | open access |
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