Under watchful eyes : Analyst site visits and firm earnings management

Gao, Zhan and Quan, Xiaofeng and Xv, Xinmei (2022) Under watchful eyes : Analyst site visits and firm earnings management. International Review of Financial Analysis, 83: 102269. ISSN 1057-5219

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Abstract

This paper investigates whether analyst site visits, where sell-side analysts visit corporate sites and interact with management, reduce earnings management by host firms. Taking advantage of the disclosure of analyst site visits by Chinese listed firms, we find that the intensity of analyst site visits is negatively associated with discretionary accruals, and this relation is robust to controlling for endogeneity. Furthermore, we find that site visits attended by star analysts and including factory tours are associated with lower levels of discretionary accruals than those without these features. We also report that the number and coverage of questions posed during site visits are negatively associated with discretionary accruals. Our results demonstrate that site visits by sell-side analysts perform a vital monitoring role and exert significant constraints on firms' opportunistic financial reporting.

Item Type:

Journal Article

Journal or Publication Title:

International Review of Financial Analysis

Additional Information:

This is the author’s version of a work that was accepted for publication in International Review of Financial Analysis. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Review of Financial Analysis, 83, 2022 DOI: 10.1016/j.irfa.2022.102269

Uncontrolled Keywords:

/dk/atira/pure/subjectarea/asjc/2000/2003

Subjects:

?? sell-side analystssite visitsearnings managementexternal monitoringfinanceeconomics and econometrics ??

Departments:

Lancaster University Management School > Accounting & Finance

ID Code:

173463

Deposited By:

ep_importer_pure

Deposited On:

21 Jul 2022 15:05

Refereed?:

Yes

Published?:

Published

Last Modified:

19 Sep 2024 02:37

URI:

https://eprints.lancs.ac.uk/id/eprint/173463