International evidence on analyst monitoring and earnings management: The roles of corporate disclosure and national culture
We examine country-level determinants of private information search incentives, and whether analysts’ role in constraining managers’ opportunistic earnings management varies across countries. In a sample of 31,312 firm-year observations originating from 30 countries, we document that: (1) analyst co...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2009
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/soa_research/1745 https://ink.library.smu.edu.sg/context/soa_research/article/2772/viewcontent/International_Evidence_on_Analyst_Monitoring_and_Earnings_Managem.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | We examine country-level determinants of private information search incentives, and whether analysts’ role in constraining managers’ opportunistic earnings management varies across countries. In a sample of 31,312 firm-year observations originating from 30 countries, we document that: (1) analyst coverage is negatively (positively) related to the level of corporate disclosure (how secretive the national culture is); (2) the negative association between analyst coverage and earnings management is observed in stronger investor protection countries but not in weaker investor protection countries; and (3) analyst monitoring fails to mitigate culturedriven earnings manipulations in countries with more individualistic and uncertainty-tolerant cultures. Taken together, financial analysts’ role in constraining opportunistic earnings management across countries appears to vary with corporate disclosure and cultural environments. |
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