Author(s)

Ahmed Marhfor¹, Rachid Ghilal², Bouchra M’Zali³

¹University of Quebec in Abitibi-Témiscamingue (UQAT), Rouyn-Noranda, Canada.
²University of Quebec in Rimouski (UQAR), Lévis, Canada.
³University of Quebec in Montréal (UQAM), Montréal, Canada.

This study examines whether more analyst coverage mitigates the informational risk borne by small investors. Using the investment-price sensitivity as a proxy for stock price informativeness, we find evidence that analysts do not specialize in the production of firm-specific information and substitute for other corporate governance mechanisms. Our results suggest that analysts are out-siders who have less access to firm-level information. The main findings are robust to many aspects of our methodology.

Analyst Coverage, Information Asymmetry, Market Efficiency, Investment-Price Sensitivity

Marhfor, A. , Ghilal, R. and M’Zali, B. (2015) Investment Sensitivity to Stock Prices and Analyst Coverage. American Journal of Industrial and Business Management, 5, 90-101. doi: 10.4236/ajibm.2015.53010.