Firm-specific or market-wide information: How does analyst coverage influence stock price synchronicity?

This study shows that analysts generate firm-specific information, rather than market-wide information. Whereas previous studies report only the positive relationship between stock price synchronicity and analyst coverage, we suggest that the positive relation can be attributed to the interaction between analyst coverage and firm performance cyclicality. After controlling for the interaction effect between the analyst coverage and cyclicality, synchronicity decreases with the analyst coverage. Both effects diminish with the high analyst forecast dispersion, namely, we observe the decreasing effect of increasing analyst coverage on synchronicity and the increasing effect of interaction between analyst coverage and cyclicality.Copyright (c) 2022 Borsa Istanbul Anonim S , irketi. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).