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Investment and access to external finance in Europe: Does analyst coverage matter?

Author

Listed:
  • Sébastien Galanti

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

  • Aurélien Leroy

    (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Anne-Gaël Vaubourg

    (CRIEF [Poitiers] - Centre de recherche sur l'intégration économique et financière - UP - Université de Poitiers = University of Poitiers)

Abstract

We aim to determine whether analyst coverage improves European firms' access to capital markets and investment. Based on a data set that includes firms from several European countries between 2000 and 2015, we implement a treatment effect framework and an instrumental variables (IV) approach, in which the intensity of industry-level waves in coverage is used as an instrument for firm-level coverage. We show that analyst coverage is favorable to firms' debt and share issuance and their investment expenses. Our paper emphasizes the key role of financial analysts in improving European firms' financial conditions

Suggested Citation

  • Sébastien Galanti & Aurélien Leroy & Anne-Gaël Vaubourg, 2022. "Investment and access to external finance in Europe: Does analyst coverage matter?," Post-Print hal-03621537, HAL.
    • Handle: RePEc:hal:journl:hal-03621537
    DOI: 10.1016/j.irfa.2022.102108
    Note: View the original document on HAL open archive server: https://hal.science/hal-03621537v2
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    More about this item

    Keywords

    investment; debt issuance; share issuance; analyst; coverage;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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