DesJardine (2015)

DesJardine, Mark.  “Under Pressure:  The Causal Effect of Financial Analyst Coverage on Long-Term Capital Investment.”  Working paper (Ivey School of Business), 2015.

From the author's abstract:  "This study examines whether the number of financial analysts covering a firm causes corporate short-termism by affecting the horizons of firms’ capital investments. I hypothesize and empirically illustrate that greater analyst coverage leads to more pressure on firms to perform in the short term, which biases firms away from making longer-term capital investments. To establish causality, I use a difference-in-differences technique that exploits a series of quasi-natural experiments provided by 52brokerage closures and brokerage mergers that occurred between 1994 and 2008. I find that firms that lose a covering analyst from a brokerage disappearance extend their attention further into the distant future and invest more in longer-term capital, compared to similar firms that do not lose an analyst."