Abstract
This paper investigates the impact of the quality of online corporate reporting (OCR) by UK listed firms on analyst behavior. Using a proposed new OCR index, we find that higher quality of OCR is related to increased analyst following. Additionally, we find that the main OCR component that drives analyst following is financial information content. However, we find no association between the quality of OCR and properties of analyst EPS forecasts as proxied by error in analyst EPS forecasts, dispersion in analyst EPS forecasts and common uncertainty in analyst information environment. We also investigate the direction of causality between OCR quality and analyst following and find that the later has no impact on the first. Furthermore, we find no evidence that herding behavior by financial analysts in the UK has interrupted the association between the quality of OCR and forecast properties. Our results contribute to the understanding of the role of analysts as information intermediaries in providing information to investors.
Highlights
The internet provided businesses with a revolutionary means of business reporting, leading to rapid growth in its use by firms (Beattie & Pratt, 2003)
Given that Earnings Surprise is the only control variable that is consistently positively significant with all properties of EPS forecasts variables, combined with the very narrow range of dispersion, we examine whether herding behavior by financial analysts in the UK has caused the insignificant relationship between online corporate reporting (OCR) quality and properties of EPS forecasts
This study examined the impact of OCR quality on two aspects of analyst behavior, their choice of which firms to follow and characteristics of their EPS forecasts as measured by error in forecasts, the degree of dispersion among forecasts and common uncertainty in the information environment
Summary
The internet provided businesses with a revolutionary means of business reporting, leading to rapid growth in its use by firms (Beattie & Pratt, 2003). Financial analysts are sophisticated users of corporate information, they use sophisticated financial software and specialized financial databases such as Reuters and Bloomberg (Rowbottom & Lymer, 2009) to collect information about firms. These financial databases are considered a complementary source of corporate information rather than a substitute to corporate websites. Information on corporate websites would be necessary if analysts are to make initiation, continuation or termination decisions on a specific firm This is consistent with Quagli and Riva (2005) who found listed firms websites more important to Italian analysts than specialized financial databases. The London Stock Exchange (LSE, 2010) noted that corporate websites are the first port of call for most investors
Sign-in/Register to view highlights & summary 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
