Multiple large shareholders and analyst activities

This paper examines whether analysts' decisions to follow or visit a firm are affected by a specific governance structure—multiple large shareholders (MLS). Using a sample of 3369 Chinese firms listed on the Shanghai and Shenzhen stock markets, we compare analyst activities for MLS firms with those for single-large-shareholder firms and find that analysts are more willing to cover/visit firms with MLS. We then empirically identify that MLS affects analyst activities through corporate governance, information environment, and firm's value, supporting the monitoring role of other blockholders on the controlling shareholder. Further analyses show that the impact of MLS on analyst activities is more prominent when other large shareholders have more power relative to the controlling shareholder, when MLS represent different types of ownership (state and nonstate), and when at least one is foreign. We also find that firms with MLS, by attracting analyst following or site visits, tend to have more accurate forecasts and more informative analyst reports. Our results imply that analysts not only view MLS as better governance but also acquire more information from firms with MLS.