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- Publisher Website: 10.1080/09638180.2023.2293915
- Scopus: eid_2-s2.0-85181905526
- WOS: WOS:001139427800001
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Article: The Effect of Analyst-Auditor Connections on Analysts’ Performance
Title | The Effect of Analyst-Auditor Connections on Analysts’ Performance |
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Authors | |
Keywords | Analyst forecasts Auditor-client confidentiality School ties Social connections |
Issue Date | 10-Jan-2024 |
Publisher | Taylor and Francis Group |
Citation | European Accounting Review, 2024 How to Cite? |
Abstract | Using Chinese data, we find that analysts’ earnings forecasts are more accurate and less biased when analysts are socially connected with the company’s signatory auditor. We also find that forecast performance improves following mandatory auditor rotations that result in new analyst-auditor connections and declines following mandatory rotations that terminate existing connections. We further find that our results become stronger when the information that auditors possess is likely to be more useful to analysts, that connected analysts have better career outcomes than unconnected analysts, and that investors and other analysts are more responsive to forecast revisions issued by connected analysts. Finally, we find that connected auditors provide higher quality audits to their connected clients and are more likely to retain those clients. Overall, our findings are consistent with connected analysts benefitting from private information obtained from their social connections with auditors by providing better earnings forecasts, and in turn, with auditors benefitting from information they receive from connected analysts by delivering higher quality audits that improve client retention. |
Persistent Identifier | http://hdl.handle.net/10722/339640 |
ISSN | 2023 Impact Factor: 2.5 2023 SCImago Journal Rankings: 1.264 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Defond, Mark | - |
dc.contributor.author | Fang, Junxiong | - |
dc.contributor.author | Lennox, Clive | - |
dc.contributor.author | Luo, Shuqing | - |
dc.date.accessioned | 2024-03-11T10:38:11Z | - |
dc.date.available | 2024-03-11T10:38:11Z | - |
dc.date.issued | 2024-01-10 | - |
dc.identifier.citation | European Accounting Review, 2024 | - |
dc.identifier.issn | 0963-8180 | - |
dc.identifier.uri | http://hdl.handle.net/10722/339640 | - |
dc.description.abstract | <p>Using Chinese data, we find that analysts’ earnings forecasts are more accurate and less biased when analysts are socially connected with the company’s signatory auditor. We also find that forecast performance improves following mandatory auditor rotations that result in new analyst-auditor connections and declines following mandatory rotations that terminate existing connections. We further find that our results become stronger when the information that auditors possess is likely to be more useful to analysts, that connected analysts have better career outcomes than unconnected analysts, and that investors and other analysts are more responsive to forecast revisions issued by connected analysts. Finally, we find that connected auditors provide higher quality audits to their connected clients and are more likely to retain those clients. Overall, our findings are consistent with connected analysts benefitting from private information obtained from their social connections with auditors by providing better earnings forecasts, and in turn, with auditors benefitting from information they receive from connected analysts by delivering higher quality audits that improve client retention.<br></p> | - |
dc.language | eng | - |
dc.publisher | Taylor and Francis Group | - |
dc.relation.ispartof | European Accounting Review | - |
dc.subject | Analyst forecasts | - |
dc.subject | Auditor-client confidentiality | - |
dc.subject | School ties | - |
dc.subject | Social connections | - |
dc.title | The Effect of Analyst-Auditor Connections on Analysts’ Performance | - |
dc.type | Article | - |
dc.identifier.doi | 10.1080/09638180.2023.2293915 | - |
dc.identifier.scopus | eid_2-s2.0-85181905526 | - |
dc.identifier.eissn | 1468-4497 | - |
dc.identifier.isi | WOS:001139427800001 | - |
dc.identifier.issnl | 0963-8180 | - |