Common Analyst Networks and Corporate Disclosure Policy Choices

We study the propagation of corporate disclosure policy choices across firms connected by common analysts. We find strong similarities in disclosure policies among firms that share common analysts. We show that these similarities are attributable to both analyst coverage initiation decisions and managerial adaptive learning/analyst influence effects. Further, we find that firms are more likely to be influenced by the disclosure policies of their common analysts’ network firms when they are covered by more influential analysts; and less likely when the firm is a more important player in its industry and the firms’ disclosure policies are generally considered to be relatively better than their network firms. Overall, our results suggest that common analyst networks facilitate the propagation of corporate disclosure policies.