Do financial analysts facilitate investors’ assessment of earnings? Evidence from the Korean stock market

Research output: Contribution to journalArticle

Abstract

This paper seeks to enhance our understanding of financial analysts in assisting market investors’ use of accounting earnings in the Korean stock market. We examine whether stock returns differentially reflect earnings information for firms with analyst coverage. We propose that the role of analysts as external monitors as well as information intermediaries enhances the market investors’ valuation of earnings. We find that market valuation of earnings is higher for firms with analyst following. Furthermore, market investors’ valuation of earnings increases (or decreases) with the number of analysts (or with the dispersion of analysts’ forecasts). This suggests that the beneficial effect of analysts arises through the quantity and quality of analysts’ information. This study contributes to the literature by investigating the important role of analysts in emerging market.

Original languageEnglish
Pages (from-to)1465-1474
Number of pages10
JournalJournal of Applied Business Research
Volume32
Issue number5
DOIs
StatePublished - 2016 Jan 1

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Korean stock market
Investors
Analysts
Financial analysts
Emerging markets
Stock returns
Intermediaries
Accounting earnings
Market valuation
Analyst coverage
Analysts' forecasts
Analyst following

Keywords

  • Earnings response coefficients
  • Financial analysts
  • Value relevance

Cite this

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Do financial analysts facilitate investors’ assessment of earnings? Evidence from the Korean stock market. / Jung, Sukyoon; Lee, Yong Seok; Choi, Seong Jin.

In: Journal of Applied Business Research, Vol. 32, No. 5, 01.01.2016, p. 1465-1474.

Research output: Contribution to journalArticle

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