Voluntary accounting changes and analyst following

摘要

Purpose - This study aims to examine the relation between voluntary accounting changes (VACs) and analyst following. Design/methodology/approach - A sample of firms was collected with VACs in the period from 1994 to 2008 and their major competitors, as well as industry benchmarking firms without accounting changes. The authors then investigated how VACs affect analysts' following decisions given accounting choice heterogeneity. Findings - The findings demonstrate that VAC is negatively associated with analysts' following decisions. Such association becomes stronger after taking into account accounting choice heterogeneity before and after VACs. Originality/value - This study contributes to the literature in the economic consequences of VACs and suggests that analysts presumably are able to comprehend the differences in accounting choices. However, the additional level of effort and the concern of manipulation may affect analysts' behavior. This study documents whether VAC results in different accounting choices from the firm's major competitors or industry benchmarking firms.