Resumen de Earnings management and analyst following: : A simultaneous equations analysis
Yongtao Hong, Fariz Huseynov, Wei Zhang
We use a simultaneous equations system to examine the relationship between earnings management and analyst following. We find that analysts ' decisions to follow firms and managerial decisions to manage earnings are jointly determined. Firms with lower levels of accrual-based earnings management offer a better information environment to attract analystfollowing. Analyst following, in turn, has important monitoring effects on managerial behavior and results in lower levels of both accrual-based and real earnings management. The information intermediary effect on analyst following is much weaker for expected "suspect firms " that manage their earnings continuously.
