Why do firms disclose analyst following on their corporate websites?

Abstract

About two-thirds of S&P500 firms disclose their analyst following on their corporate websites. Half of these firms disclose their analyst following in an unbiased fashion, while the rest manage this disclosure by selectively omitting analysts with pessimistic views (selective disclosers). Consistent with facing stronger incentives to manage expectations, coupled with weaker information environments and monitoring by external stakeholders, selective disclosers exhibit lower profitability, higher growth opportunities, stronger financing needs and a greater percentage of retail investor ownership. Moreover, selective disclosers experience lower future returns and exhibit higher income smoothing and lower accrual quality. Taken together, our evidence is consistent with some firms attempting to serve their strategic needs by selectively excluding from their websites analysts with less favourable views of their firm.