%0 Journal Article
%T The Role of Analysts as Gatekeepers: Enhancing Transparency and Curbing Earnings Management in Brazil
%A Antonio Lopo Martinez
%J Revista de Administra£¿£¿o Contemporanea
%D 2011
%I ANPAD - Associa??o Nacional dos Programas de P¨®s-gradua??o em Administra??o
%X This paper examines the relationship of analysts¡¯ coverage, forecasting errors and earnings management. It corroborates the role of analysts as gatekeepers by finding that analysts enhance transparency and reduce the scope of earnings management. To identify analysts¡¯ coverage we used the I/B/E/S, from where we also obtained information on the consensus projections of analysts for listed Brazilian companies. The results indicated a negative correlation between the number of analysts covering firms and the magnitude of their discretionary accruals in absolute terms, indicating that more scrutiny inhibits earnings management. We also found a negative correlation between analysts¡¯ coverage and forecasting errors. Multivariate regressions showed statistically significant results in the same sense. Therefore, market analysts, despite the severe criticism they receive from the specialized press, actually have a beneficial effect on corporate governance by monitoring managers and inhibiting earnings management.
%K analysts¡¯ coverage
%K earnings management
%K earnings forecasts
%K corporate governance.
%U http://www.anpad.org.br/periodicos/arq_pdf/a_1216.pdf