A Study on the Impact of Security Analysts&#039; Monitoring and Marketing Functions on the Market Value of the Firms Included in the Philippine Composite Index (PHISIX) Covering the Period 1994-1997

Leila  Y. Calderon,

A Study on the Impact of Security Analysts' Monitoring and Marketing Functions on the Market Value of the Firms Included in the Philippine Composite Index (PHISIX) Covering the Period 1994-1997

Abstract:

Chung and Jo (1996) found out that analysts following has a significant and positive impact on firm's market value, as proxied by the Tobin's q. The analysts may also influence firm value through its impact on investor's cognizance of securities. Investors become familiar with the securities they trade through the information provided for by analysts. As such, firms with large number of analysts following may also have an expanded breadth of investor cognizance. Also, high quality firms are usually followed by a larger number of analysts because the analysts' brokerages will find it easier to market these firms. Thus, analysts have a stronger incentive to follow stocks of high quality companies, since they are familiar to investors.