Geographic proximity and analyst coverage decisions: Evidence from IPOs

Patricia C. O'Brien and Hongping Tan

Journal of Accounting and Economics, 2015, vol. 59, issue 1, 41-59

Abstract: Using hand-collected data on analyst locations, we study how geographic proximity affects analyst coverage decisions for U.S. firms that went public during 1996–2009, along with the impact of local coverage on firm visibility. Analysts are 80% more likely to cover local firms than non-local ones, and nearby non-underwriter analysts initiate coverage one to three weeks earlier than distant ones. Proximity matters most for smaller, less visible firms, for firms with less complex operations and for lower status analysts. Less visible firms may use local analyst coverage as a stepping-stone to increase visibility with other analysts and institutional investors.

Keywords: Geographic proximity; Financial analyst; Visibility; IPO; Coverage (search for similar items in EconPapers)
JEL-codes: G24 G29 G30 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:59:y:2015:i:1:p:41-59

DOI: 10.1016/j.jacceco.2014.11.002

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