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Security Analysis, Agency Costs, and UK Firm Characteristics

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Author Info

  • Doukas, John A.

    (Stern School of Business)

  • Phillip J. McKnight

    (Cardiff Business School)

  • Christos Pantzalis

    (University of South Florida)

Abstract

This paper assesses the monitoring power of security analysts from the manager-shareholder conflict perspective. Using a sample of UK firms tracked by security analysts, our evidence supports the view that security analysis acts as a monitoring mechanism in reducing agency costs. We also find that security analysts are more effective in reducing agency costs for smaller and more focused firms rather than larger and more diversified firms suggesting that for larger and more complex firms security analysis is less effective. The UK findings suggest that the monitoring role of security analysts is not restricted to the U.S. capital market environment.

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File URL: http://repec.org/res2002/Doukas.pdf
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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 65.

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Date of creation: 29 Aug 2002
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Handle: RePEc:ecj:ac2002:65

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Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
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Web page: http://www.res.org.uk/society/annualconf.asp
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References

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Citations

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Cited by:
  1. Henry, Darren, 2010. "Agency costs, ownership structure and corporate governance compliance: A private contracting perspective," Pacific-Basin Finance Journal, Elsevier, vol. 18(1), pages 24-46, January.
  2. Iatridis, George & Valahi, Styliani, 2010. "Voluntary IAS 1 accounting disclosures prior to official IAS adoption: An empirical investigation of UK firms," Research in International Business and Finance, Elsevier, vol. 24(1), pages 1-14, January.
  3. Rama Prasad Kanungo, 2004. "Security Analysts and Market Reaction:Caveat for Monitoring," Finance 0411039, EconWPA.
  4. Iatridis, George & Kadorinis, George, 2009. "Earnings management and firm financial motives: A financial investigation of UK listed firms," International Review of Financial Analysis, Elsevier, vol. 18(4), pages 164-173, September.
  5. Iatridis, George, 2010. "International Financial Reporting Standards and the quality of financial statement information," International Review of Financial Analysis, Elsevier, vol. 19(3), pages 193-204, June.

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