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Do financial analysts perform a monitoring role in China? Evidence from Modified Audit Opinions
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Chen, Jiandong, Hou , Wenxuan, Ding, Rong and Johan, Sophie (2016) Do financial analysts perform a monitoring role in China? Evidence from Modified Audit Opinions. Abacus, 52 (3). pp. 473-500. doi:10.1111/abac.12081 ISSN 1467-6281.
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Official URL: http://doi.org/10.1111/abac.12081
Abstract
This paper examines the impact of analyst coverage on the financial reporting quality of firms as reflected by modified audit opinions (MAOs). Using a sample of Chinese listed firms between 2003 and 2009, we find that analyst coverage, which serves as an external governance mechanism, helps to enhance the financial reporting quality of Chinese listed firms. The effect is more pronounced for non-state-owned enterprises (i.e., private firms), in that they are more dependent on external equity capital and, therefore, under greater pressure from analysts to provide high-quality accounting information. Furthermore, analysts play a more effective role for firms with stronger incentives to manipulate financial reports. Our findings are robust to the control of endogeneity issue.
| Item Type: | Journal Article | ||||||||
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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| Journal or Publication Title: | Abacus | ||||||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | ||||||||
| ISSN: | 1467-6281 | ||||||||
| Official Date: | 2016 | ||||||||
| Dates: |
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| Volume: | 52 | ||||||||
| Number: | 3 | ||||||||
| Page Range: | pp. 473-500 | ||||||||
| DOI: | 10.1111/abac.12081 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
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