Abstract
Coverage by security analysts and media journalists increase stock valuations. We provide a theory using an assignment approach. Agents generate coverage by producing public signals about firm profits of heterogeneous precision. Firms seeking higher share prices compete for coverage, which improves price efficiency and lowers the risk premium required by investors. Large and volatile firms benefit more from and pay more for accurate coverage while others prefer to be neglected since they can only hire inaccurate agents. This positive assortative matching leads expected returns to decline with not just coverage but also its accuracy and with firm size and volatility, reconciling outstanding asset-pricing puzzles.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
