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The influence of investor protection on the performance of financial analysts: time series analyses in four different legal systems
Linnæus University.
Linnæus University.
Linnæus University.ORCID iD: 0000-0001-5098-1618
2015 (English)In: International Journal of Disclosure & Governance, ISSN 1741-3591, E-ISSN 1746-6539, Vol. 12, no 2, 167-184 p.Article in journal (Refereed) Published
Abstract [en]

In the corporate governance landscape there are several different groups of so-called gatekeepers who act as intermediary between the company and investors. Financial analysts represent one of these groups that have been especially tied to the question of how corporate laws affect the overall efficiency of corporate governance. It has, for example, been proposed that their performance, that is, predicting earnings per share (EPS), is influenced by the strength of the legal system in terms of investor protection. In this study we analyze this relationship in four European countries using a newly developed index for investor protection. This allows us to conduct analysis both cross-sectionally and over time, which is an opportunity for a more refined analysis of the impact of strengthened investor protection than prior studies. Our main conclusion is that there is overall support for the proposition that there is a relation between financial analysts’ performance and the strength of legal protection based on both analyses of changes over time and between countries. Their performance is better with a higher degree of investor protection. But we also claim that the analysts’ role and investor protection can be seen as a substitution for each other when working as mechanisms in the corporate governance landscape, as there is a more extensive market for analysts when there is less investor protection. The results provide an in-depth analysis of the effect of strengthened legalization and also how different corporate governance mechanisms can affect each other. This is especially of value for policy makers and academics interested in the impact and consequences of legal reforms.

Place, publisher, year, edition, pages
2015. Vol. 12, no 2, 167-184 p.
Keyword [en]
corporate governance, investor protection, financial analysts
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hkr:diva-17444DOI: 10.1057/jdg.2014.1OAI: oai:DiVA.org:hkr-17444DiVA: diva2:1148956
Available from: 2017-10-13 Created: 2017-10-13 Last updated: 2017-10-13Bibliographically approved

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Collin, Sven-Olof Yrjö
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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf