Investor protection and analysts’ cash flow forecasts around the world
Review of Accounting Studies · 2007 · Volume 12 · Issue 2
DOI: 10.1007/s11142-007-9030-7
Abstract
We find that analysts are more likely to provide cash flow forecasts in countries with weak investor protection. This finding is consistent with our hypothesis that market participants demand (and analysts supply) cash flow information when weak investor protection results in earnings that are less likely to reflect underlying economic performance. Our results suggest that information intermediaries respond to market-based incentives to attenuate the adverse effects of country-level institutional factors on earnings’ usefulness. These findings contribute to the literature by shedding light on the institutional determinants of analysts’ research activities, and on the nature of the financial information they generate.
Keywords
International accounting, Investor protection, Analysts’ forecasts, Cash flows
Enable JavaScript for citation tools and additional paper interactions.