Corporate financialisation, market attention and analyst tracking

Abstract

AbstractAs an effective external governance factor, the effectiveness of analysts' governance and tracking options has been one of the most important topics of research. In recent years, there has been an influx of capital from real companies into finance, real estate and other industries related to the virtual economy, which has a significant impact on the financial position of companies and can also affect analysts' tracking choices. This paper takes A‐share listed companies from 2010 to 2021 as the research object and finds that as the financialisation of enterprises deepens, the number of analysts' tracking decreases; however, with the increase of market attention, the negative impact of the financialisation of enterprises on analysts' tracking will be weakened. Further research shows that, first, financial risk plays a mediating role between corporate financialisation and analyst tracking, in that corporate financialisation increases financial risk, which in turn leads to a decrease in the number of analyst tracking; second, as institutional investors have a greater influence on analysts, the impact of corporate financialisation on analyst tracking is weakened as the shareholding of institutional investors increases; finally, that holding two different types of financial assets, short‐term and long‐term, also has different consequences. The findings of this paper examine the impact of corporate financialisation from the analyst's perspective, confirming the identification and selection capabilities that analysts have.