Speaker：Dr Wei Shi

Site：B129

Time：9：30-11：00 Thursday Dec.21 2017

To maximize firm value managers must efficiently invest new capital. This paper examines whether analyst coverage impacts a firm’s investment efficiency. Using broker mergers and closures as exogenous shocks to the number of analysts covering a firm, we find that firm investment efficiency decreases by 37% after losing an analyst coverage. The impact is largest for firms with the fewest number of analysts. We find evidence that the effect is driven by the role analyst play in information acquisition and in price efficiency. Our results suggest that the recent decline in analyst coverage may negatively impact future firm performance.