Analyst following and credit ratings

Contemporary Accounting Research

Volumn 25, Issue 4, 2008, Pages 1007-1044

  Mei, Cheng ^a   Subramanyam, K R ^b  

^a UNIVERSITY OF ARIZONA   (United States)

^b UNIVERSITY OF SOUTHERN CALIFORNIA   (United States)

Author keywords

Analyst following; Cost of debt; Credit rating; Default risk

Indexed keywords

EID: 57149123592     PISSN: 08239150     EISSN: 19113846     Source Type: Journal    
DOI: 10.1506/car.25.4.3     Document Type: Article

References (57)

1. Ahmed, A., B. Billings, R. Morton, and M. Stanford-Harris. 2002. The role of accounting conservatism in mitigating bondholder-shareholder conflicts over dividend policy and in reducing debt cost. The Accounting Review 11 (4): 867-90.
2. Alford, A. W., and P. G. Berger. 1999. A simultaneous equations analysis of forecast accuracy, analyst following, and trading volume. Journal of Accounting, Auditing and Finance 14 (3): 219-40.
3. Anderson, R., S. Mansi, and D. Reeb. 2003. Founding family ownership and the agency costs of debt. Journal of Financial Economics 68 (2): 263-87.
4. Ashbaugh, H., D. Collins, and R. LaFond. 2006. The effects of corporate governance on firm's credit ratings. Journal of Accounting and Economics 42 (1-2): 203-43.
5. Asquith, P., and T. Wizman. 1990. Event risk, covenants, and bondholders' returns in leveraged buyouts. Journal of Financial Economics 27 (1): 195-214.
6. Barth, M., and A. Hutton. 2000. Information intermediaries and the pricing of accruals. Working paper, Harvard University and Stanford University.
7. Barth, M. E., R. Kasznik, and M. F. McNichols. 2001. Analyst coverage and intangible assets. Journal of Accounting Research 39 (1): 1-34.
8. Bhojraj, S., and P. Sengupta. 2003. Effect of corporate governance on bond ratings and yields: The role of institutional investors and outside directors. Journal of Business 76 (3): 455-75.
9. Blume, M. E., F. Lim, and A. C. MacKinlay. 1998. The declining credit quality of US corporate debt: Myth or reality? The Journal of Finance 53 (4): 1389-413.
10. Brennan, M. J., and P. J. Hughes. 1991. Stock prices and the supply of information. The Journal of Finance 46 (5): 1665-91.
11. Brennan, M., and A. Subrahmanyam. 1995. Investment analysis and price formation in securities markets. Journal of Financial Economics 38 (3): 361-81.
12. Chung, K. H., and H. Jo. 1996. The impact of security analysts' monitoring and marketing functions on the market value of firms. Journal of Financial and Quantitative Analysis 31 (4): 493-512.
13. DeFond, M., and J. Jiambalvo. 1994. Debt convenant violation and manipulation of accruals. Journal of Accounting & Economics 17 (2): 145-77.
14. Diamond, D., and R. Verrecchia. 1991. Disclosure, liquidity, and the cost of capital. The Journal of Finance 46 (4): 1325-60.
15. Easley, D., and M. O'Hara. 2004. Information and the cost of capital. The Journal of Finance 59 (4): 1553-83.
16. Fisher, L. 1959. Determinants of risk premiums on corporate bonds. Journal of Political Economy 67 (3): 217-37.
17. Francis, J., R. LaFond, P. Olsson, and K. Schipper. 2005. The market pricing of accruals quality. Journal of Accounting and Economics 39 (2): 295-327.
18. Frankel, R., and X. Li. 2004. Characteristics of a firm's information environment and the information asymmetry between insiders and outsiders. Journal of Accounting and Economics 37 (2): 229-59.
19. Gebhardt, W., C. Lee, and B. Swaminathan. 2001. Toward an implied cost of capital. Journal of Accounting Research 39 (1): 135-76.
20. Givoly, D., and J. Lakonishok. 1979. The information content of financial analysts' forecast of earnings. Journal of Accounting and Economics 1 (3): 1-21.
21. Gode, D., and P. Mohanram. 2003. Inferring the cost of capital using the Ohlson-Juettner model. Review of Accounting Studies 8 (3): 399-431.
22. Gompers, P., J. Ishii, and A. Merrick. 2003. Corporate governance and equity prices. Quarterly Journal of Economics 118 (1): 107-55.
23. Granger, C. 1969. Investigating causal relations by econometric models and cross-spectral methods. Econometrica 37 (3): 424 - 38.
24. Gu, Z. 2002. Cross-sample incomparability of R2s and additional evidence on value relevance changes over time. Working paper, Carnegie Mellon University.
25. Hausman, J. A. 1978. Specification tests in econometrics. Econometrica 46 (6): 1251-72.
26. Healy, P. M., and K. G. Palepu. 2001. Information asymmetry, corporate disclosure, and the capital markets: A review of empirical disclosure literature. Journal of Accounting Economics 31 (1-3): 405-40.
27. Heflin, F., K. R. Subramanyam, and Y. Zhang. 2003. Regulation FD and the financial information environment: Early evidence. The Accounting Review 78 (1): 1-37.
28. Jensen, M., and W. Meckling. 1976. Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 3 (4): 305-60.
29. Jorion, P., Z. Liu, and C. Shi. 2005. Informational effects of regulation FD: Evidence from rating agencies. Journal of Financial Economics 76 (2): 309-30.
30. Kaplan, R., and G. Urwitz. 1979. Statistical models of bond ratings: A methodological inquiry. Journal of Business 52 (2): 231-61.
31. Klein, A. 1998. Firm performance and board committee structure. Journal of Law and Economics 41 (1): 275-303.
32. Klock, M., S. Mansi, and W. Maxwell. 2005. Does corporate governance matter to bondholders? Journal of Financial and Quantitative Analysis 40 (4): 693-719.
33. Lang, M. H., K. V. Lins, and D. P. Miller. 2003. ADRs, analysts, and accuracy: Does cross-listing in the U.S. improve a firm's information environment and increase market value? Journal of Accounting Research 41 (2): 317-45.
34. Lang, M. H., K. V. Lins, and D. P. Miller. 2004. Concentrated control, analyst following, and valuation: Do analysts matter most when investors are protected least? Journal of Accounting Research 42 (3): 589-623.
35. Lang, M. H., and R. J. Lundholm. 1993. Cross-sectional determinants of analyst ratings of corporate disclosures. Journal of Accounting Research 31 (2): 246-71.
36. Lang, M. H., and R. J. Lundholm. 1996. Corporate disclosure policy and analyst behavior. The Accounting Review 71 (4): 467-92.
37. Mansi, S., W. Maxwell, and D. Miller. 2004. Does auditor quality and tenure matter to investors? Evidence from the bond market. Journal of Accounting Research 42 (4): 755-93.
38. Mansi, S., W. Maxwell, and D. Miller. 2006. Information risk and the cost of debt capital. Working paper, University of Arizona, Virginia Polytechnic Institute and State University, and Southern Methodist University.
39. Marais, L., K. Schipper, and A. Smith. 1989. Wealth effect of going private for senior securities. Journal of Financial Economics 23 (1): 155-91.
40. McConnell, J., and H. Servaes. 1990. Additional evidence on equity ownership and corporate value. Journal of Financial Economics 27 (2): 595-612.
41. Merton, R. C. 1974. On the pricing of corporate debt: The risk structure of interest rates. The Journal of Finance 29 (2): 449-70.
42. Merton, R. C. 1987. A simple model of capital market equilibrium with incomplete information. The Journal of Finance 42 (3): 483-510.
43. Mohanram, P., and S. V. Sunder. 2006. How has Regulation Fair Disclosure affected the operations of financial analysts? Contemporary Accounting Research 23 (2): 491-525.
44. Morck, R., A. Shleifer, and R. Vishny. 1988. Management ownership and market valuation: an empirical analysis. Journal of Financial Economics 20 (1): 293-315.
45. Moyer, C., R. Chatfield, and P. Sisneros. 1989. Security analyst monitoring activity: Agency costs and information demands. Journal of Financial and Quantitative Analysis 24 (4): 503-12.
46. O'Brien, P. C., and R. Bhushan. 1990. Analyst following and institutional ownership. Journal of Accounting Research 28 (Supplement): 55-76.
47. Ogden, J. P. 1987. Determinants of the ratings and yields on corporate bonds. Journal of Financial Research 10(4): 329-39.
48. Pittman, J., and S. Fortin. 2004. Auditor choice and the cost of debt capital for newly public firms. Journal of Accounting and Economics 37 (3): 113-36.
49. Roulstone, D. 2003. Analyst following and market liquidity. Contemporary Accounting Research 20 (3): 551-78.
50. Securities and Exchange Commission (SEC). 2000. Selective disclosure and insider trading (Regulation FD). 17 CFR parts 240, 243, and 249; release nos. 33-7881, 34-43154, and IC-24599. Available online at http://www.sec.gov/rules/ final/33-7881.htm.
51. Sengupta, P. 1998. Corporate disclosure quality and the cost of debt. The Accounting Review 73 (4): 459-74.
52. Shleifer, A., and R. W. Vishny. 1989. Management entrenchment: The case of manager-specific investments. Journal of Financial Economics 25 (1): 123-39.
53. Sims, C. 1972. Money, income and causality. American Economic Review 62 (4): 540-52.
54. Standard & Poor's. 2004. Standard & Poor's corporate governance scores: Criteria, methodology and definitions. New York: McGraw-Hill.
55. Verrecchia, R. E. 1996. Discussion: "Impact of analyst following on stock prices and the implications for firms' disclosure policies". Journal of Accounting, Auditing and Finance 11 (3): 355-9.
56. Warga, A., and I. Welch. 1993. Bondholder losses in leveraged buyouts. Review of Financial Studies 6 (4): 959-82.
57. Womack, K. L. 1996. Do brokerage analysts' recommendations have investment value? The Journal of Finance 51 (1): 137-67.