https://orcid.org/0000-0002-3475-2089
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ABSTRACT
This study investigates the influence of analyst coverage on corporate leverage adjustment (CLA) in China. We analyzed 26,673 firm-year observations from the Shanghai and Shenzhen stock exchanges from 2000 to 2020 and found that analyst coverage had a negative impact on CLA, which was stronger in firms with poor performance. We posit that analyst forecast divergence and pressure-induced managerial myopia are possible mechanisms through which analyst coverage influences CLA. Our study contributes to the dynamic trade-off model literature by demonstrating that analyst coverage is also a determinant of CLA. Furthermore, our findings help regulators and investors to comprehensively understand the role of analysts in emerging markets.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Ethical Approval
This article does not contain any studies with human participants or animals performed by any of the authors.
Informed Consent
Informed consent was obtained from all individual participants included in the study.
Authors Contributions
Luo helped to draft the manuscript. Sun and Chang participated in the design of the study and performed the statistical analysis. Ho conceived of the study and participated in its design and coordination. All authors read and approved the final manuscript.