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Seeking out non-public information : sell-side analysts and the freedom of information act
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Klein, April, Li, Tao and Zhang, Bobo (2020) Seeking out non-public information : sell-side analysts and the freedom of information act. The Accounting Review, 95 (1). pp. 233-257. doi:10.2308/accr-52442 ISSN 1558-7967.
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Official URL: http://dx.doi.org/10.2308/accr-52442
Abstract
A number of sell-side healthcare analysts gain access to information outside the purview of management through Freedom of Information Act requests to the Food and Drug Administration for records on factory inspections, complaints, and drug and medical device applications. Using a difference-in-differences methodology, we find that buy (sell) recommendations and upgrades (downgrades) earn higher (lower) stock returns over the year following the receipt of FDA records. We also examine the type of information revealed in FDA factory inspection reports, and find that analysts are less likely to downgrade and are less pessimistic in their recommendations than the consensus recommendation when the information contained in the FDA report is not particularly severe. Our findings are consistent with a subset of analysts utilizing non-public information channels independent of management to gain value-relevant information about their covered firms.
Item Type: | Journal Article | ||||||||
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Subjects: | K Law [Moys] > KM Common Law, Public Law | ||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Freedom of Information Act, Sell-side analysts, Freedom of Information | ||||||||
Journal or Publication Title: | The Accounting Review | ||||||||
Publisher: | American Accounting Association | ||||||||
ISSN: | 1558-7967 | ||||||||
Official Date: | 2020 | ||||||||
Dates: |
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Volume: | 95 | ||||||||
Number: | 1 | ||||||||
Page Range: | pp. 233-257 | ||||||||
DOI: | 10.2308/accr-52442 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 1 May 2020 | ||||||||
Date of first compliant Open Access: | 4 May 2020 | ||||||||
Open Access Version: |
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