IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v218y2022ics0165176522002804.html
   My bibliography  Save this article

Monetary shocks and the analyst coverage of the firm

Author

Listed:
  • Adra, Samer
  • Barbopoulos, Leonidas G.

Abstract

Contractionary monetary shocks, which are known to reduce growth and tighten lending, significantly reduce firm-level analyst coverage. The reduction in analyst coverage of high-leverage firms is almost 50% larger, and faster, than the reduction in the coverage of low-leverage firms.

Suggested Citation

  • Adra, Samer & Barbopoulos, Leonidas G., 2022. "Monetary shocks and the analyst coverage of the firm," Economics Letters, Elsevier, vol. 218(C).
    • Handle: RePEc:eee:ecolet:v:218:y:2022:i:c:s0165176522002804
    DOI: 10.1016/j.econlet.2022.110776
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176522002804
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2022.110776?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karel Mertens & Morten O. Ravn, 2013. "The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States," American Economic Review, American Economic Association, vol. 103(4), pages 1212-1247, June.
    2. Jordà, Òscar & Schularick, Moritz & Taylor, Alan M., 2020. "The effects of quasi-random monetary experiments," Journal of Monetary Economics, Elsevier, vol. 112(C), pages 22-40.
    3. Chahine, Salim & Daher, Mai & Saade, Samer, 2021. "Doing good in periods of high uncertainty: Economic policy uncertainty, corporate social responsibility, and analyst forecast error," Journal of Financial Stability, Elsevier, vol. 56(C).
    4. Mark Gertler & Peter Karadi, 2015. "Monetary Policy Surprises, Credit Costs, and Economic Activity," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 44-76, January.
    5. Somnath Das & Re‐Jin Guo & Huai Zhang, 2006. "Analysts' Selective Coverage and Subsequent Performance of Newly Public Firms," Journal of Finance, American Finance Association, vol. 61(3), pages 1159-1185, June.
    6. Sudheer Chava & Alex Hsu & Robin Greenwood, 2020. "Financial Constraints, Monetary Policy Shocks, and the Cross-Section of Equity Returns," The Review of Financial Studies, Society for Financial Studies, vol. 33(9), pages 4367-4402.
    7. Pornsit Jiraporn & Yixin Liu & Young S. Kim, 2014. "How Do Powerful CEOs Affect Analyst Coverage?," European Financial Management, European Financial Management Association, vol. 20(3), pages 652-676, June.
    8. Marek Jarociński & Peter Karadi, 2020. "Deconstructing Monetary Policy Surprises—The Role of Information Shocks," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 1-43, April.
    9. Emi Nakamura & Jón Steinsson, 2018. "High-Frequency Identification of Monetary Non-Neutrality: The Information Effect," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1283-1330.
    10. McNichols, M & O'Brien, PC, 1997. "Self-selection and analyst coverage," Journal of Accounting Research, Wiley Blackwell, vol. 35, pages 167-199.
    11. Bradley, Daniel & Gokkaya, Sinan & Liu, Xi & Xie, Fei, 2017. "Are all analysts created equal? Industry expertise and monitoring effectiveness of financial analysts," Journal of Accounting and Economics, Elsevier, vol. 63(2), pages 179-206.
    12. Barakchian, S. Mahdi & Crowe, Christopher, 2013. "Monetary policy matters: Evidence from new shocks data," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 950-966.
    13. Hassan Tehranian & Mengxing Zhao & Julie L. Zhu, 2014. "Can Analysts Analyze Mergers?," Management Science, INFORMS, vol. 60(4), pages 959-979, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giancarlo Corsetti & Joao B Duarte & Samuel Mann, 2022. "One Money, Many Markets [Fixed Rate Versus Adjustable Rate Mortgages: Evidence from Euro Area Banks]," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 513-548.
    2. Lu, Dong & Tang, Huoqing & Zhang, Chengsi, 2023. "China's monetary policy surprises and corporate real investment," China Economic Review, Elsevier, vol. 77(C).
    3. Corsetti, Giancarlo & Duarte, Joao B. & Mann, Samuel, 2020. "One Money, Many Markets: Monetary Transmission and Housing Financing in the Euro Area," CEPR Discussion Papers 14968, C.E.P.R. Discussion Papers.
    4. Aeimit Lakdawala, 2019. "Decomposing the effects of monetary policy using an external instruments SVAR," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 34(6), pages 934-950, September.
    5. Oliver Holtemöller & Alexander Kriwoluzky & Boreum Kwak, 2024. "Is There an Information Channel of Monetary Policy?," Discussion Papers of DIW Berlin 2084, DIW Berlin, German Institute for Economic Research.
    6. Dahlhaus, Tatjana & Vasishtha, Garima, 2021. "Reprint: Monetary policy news in the US: Effects on emerging market capital flows," Journal of International Money and Finance, Elsevier, vol. 114(C).
    7. Cesa-Bianchi, Ambrogio & Thwaites, Gregory & Vicondoa, Alejandro, 2020. "Monetary policy transmission in the United Kingdom: A high frequency identification approach," European Economic Review, Elsevier, vol. 123(C).
    8. Oliver Holtemöller & Alexander Kriwoluzky & Boreum Kwak, 2020. "Exchange Rates and the Information Channel of Monetary Policy," Discussion Papers of DIW Berlin 1906, DIW Berlin, German Institute for Economic Research.
    9. Pascal Paul, 2020. "The Time-Varying Effect of Monetary Policy on Asset Prices," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 690-704, October.
    10. Hiroyuki Kubota & Mototsugu Shintani, 2020. "High-frequency Identification of Unconventional Monetary Policy Shocks in Japan," CARF F-Series CARF-F-502, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    11. Dahlhaus, Tatjana & Vasishtha, Garima, 2020. "Monetary policy news in the US: Effects on emerging market capital flows," Journal of International Money and Finance, Elsevier, vol. 109(C).
    12. Corsetti, G. & Duarte, J. B. & Mann, S., 2018. "One Money, Many Markets - A Factor Model Approach to Monetary Policy in the Euro Area with High-Frequency Identification," Cambridge Working Papers in Economics 1816, Faculty of Economics, University of Cambridge.
    13. Miranda-Agrippino, Silvia & Ricco, Giovanni, 2023. "Identification with External Instruments in Structural VARs," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 1-19.
    14. Zhang, Mi & Sensoy, Ahmet & Cheng, Feiyang & Zhao, Xuankai, 2022. "Three channels of monetary policy international transmission: Identifying spillover effects from the US to China," Research in International Business and Finance, Elsevier, vol. 61(C).
    15. Felipe Beltrán & David Coble, 2023. "Monetary Policy Surprises on the Banking Sector: the Role of the Information and Pure Monetary Shocks," Working Papers Central Bank of Chile 979, Central Bank of Chile.
    16. van der Zwan, Terri & Kole, Erik & van der Wel, Michel, 2024. "Heterogeneous macro and financial effects of ECB asset purchase programs," Journal of International Money and Finance, Elsevier, vol. 143(C).
    17. Max Breitenlechner & Martin Geiger & Mathias Klein, 2024. "The Fiscal Channel of Monetary Policy," Working Papers 2024-07, Faculty of Economics and Statistics, Universität Innsbruck.
    18. Robin Braun & Ralf Brüggemann, 2017. "Identification of SVAR Models by Combining Sign Restrictions With External Instruments," Working Paper Series of the Department of Economics, University of Konstanz 2017-07, Department of Economics, University of Konstanz.
    19. Silvia Miranda-Agrippino, 2015. "Unsurprising Shocks: Information, Premia, and the Monetary Transmission," Discussion Papers 1613, Centre for Macroeconomics (CFM), revised Apr 2016.
    20. McNeil, James, 2023. "Monetary policy and the term structure of inflation expectations with information frictions," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).

    More about this item

    Keywords

    Monetary policy; Analyst coverage; Leverage;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:218:y:2022:i:c:s0165176522002804. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.