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The Regulatory Effect on the Performance of Financial Analysts: Time Series from Two different Legal Systems
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.ORCID iD: 0000-0002-1626-8410
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
2013 (English)In: Journal of Business and Financial Affairs, ISSN 2167-0234, Vol. 2, no 2Article in journal (Refereed) Published
Abstract [en]

The focus of this paper is the relationship between regulatory settings and financial analysts’ performance, which is examined by studying the level of shareholder protection and the performance of financial analysts in two countries with different legal origins. By using a newly constructed index to measure shareholder protection, we are able to analyze how changes in shareholder protection over time can affect analysts’ performance. By comparing two countries with different legal traditions (the United Kingdom (UK) and Sweden), we are also able to assess whether the underlying legal origin is an influential factor. The results show that increased shareholder protection improves forecast accuracy in both the UK and Sweden, supporting the idea that stronger shareholder protection regulations improve analysts’ performance whether the legal context is rooted in common law or Scandinavian civil law tradition. The findings also indicate that strengthened shareholder protection decreases forecast dispersion in Sweden and forecast bias in the UK, further supporting the idea that stronger shareholder protection improves analysts’ performance even though the results differed across legal contexts. We did, however, find a substitution effect in both countries: Strengthened shareholder protection makes analysts’ services less valuable to investors, thus leading to a reduction in the number of analysts. Our main conclusion is that changes in shareholder protection affect the performance of analysts irrespective of the country’s legal origin, i.e. common law or Scandinavian civil law. However, legal origin seems to have an impact on the magnitude of analysts’ performance based on changes in shareholder protection.

Place, publisher, year, edition, pages
2013. Vol. 2, no 2
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
URN: urn:nbn:se:lnu:diva-31462OAI: oai:DiVA.org:lnu-31462DiVA, id: diva2:687752
Note

Open Access-tidskrift

Available from: 2014-01-15 Created: 2014-01-15 Last updated: 2017-02-17Bibliographically approved

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No full text in DiVA

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von Koch, ChristopherNilsson, OlaJonnergård, Karin

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
  • rtf