애널리스트 커버리지 중단과 기업가치의 관련성에 관한 연구

This study examines whether the decision made by financial analysts to discontinue coverage contains negative information on firm value. We analyzed the changes in operating performance, the firm value, the forecast biases of analysts, and illiquidity of 855 coverage-discontinuing firms and the same number of coverage-continuing firms. The major empirical findings are summarized as follows. First, the operating performance deteriorates and the firm value decreases after the coverage termination. In addition, there are significant differences in the operating performance and the firm value changes between the coverage-discontinuing and the coverage-continuing firms. Second, firms which discontinued coverage show larger optimistic forecast biases than the firms which continued coverage in all of the sub-periods. It suggests that analysts view the future of the coverage-discontinuing firms more favorably before discontinuation of the coverage and that they simply discontinue the coverage rather than reflect negative information in their later reports once they have negative information. Third, Amihud’s Illiquidity and bid-ask spread increase after the coverage-termination. Overall, analysts do not report unfavorable information in their reports due to the conflict-of-interest problem. Therefore, the analysts’ decisions to discontinue the coverage contain negative information on firm value.