SPONSORED ANALYST COVERAGE, INFORMATION ASYMMETRY AND STOCK TURNOVER

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Yee-Boon Foo

DOI:10.22495/cocv11i1c7art4

Abstract

This study draws on Merton’s investor recognition hypothesis to investigate whether (1) the sponsored analyst coverage scheme introduced by the Bursa Malaysia in April 2005 is associated with stock turnover, and (2) the relationship is stronger for firms with high information asymmetry. The results show that stock turnover is positively associated with the frequency of coverage and the association is stronger for firms with higher information asymmetry. In addition, it is found that during the initial stage of the scheme where the stock market was experiencing a downturn, analyst coverage has a significant constraining effect on the reduction in stock turnover.

Keywords: Sponsored Analyst Coverage, Stock Turnover, Board Independence, Information Asymmetry, Malaysia

How to cite this paper: Foo, Y. B. (2013). Sponsored analyst coverage, information asymmetry and stock turnover. Corporate Ownership & Control, 11(1-7), 657-670. http://dx.doi.org/10.22495/cocv11i1c7art4