Analyst coverage and earnings management: Evidence from China

Abstract

Previous studies have documented security analysts’ potential role in corporate governance specifically their influences on earnings management activities However most studies focus on the developed markets which usually have better information environment than the developing markets This study examines security analysts’ role in public firms’ earnings management behavior in China the world’s largest developing market Using unsigned measurement of earnings management I find that the more analyst coverage exists the less overall tendency of earnings management firms have Moreover splitting the sample by managed earnings’ directions I document that analysts in China stock market have higher curbing effectiveness of positive earnings management than that of negative earnings management These results provide incremental evidence to what affect earnings management behavior of China’s public firms and it strengthen our understanding towards the external governance role of analyst coverage

Date of Award	2015 Feb 2
Original language	English
Supervisor	Ping-Hsun Huang (Supervisor)