Analyst forecasts following indictments of controlling shareholders: evidence from Korean chaebols

This study examines analysts’ dual incentives – balancing information provision with potential conflicts of interest – in Korean chaebols, where controlling shareholders often have stakes in affiliated brokerages. Using indictments of controlling shareholders as exogenous governance shocks, we find that affiliated analysts issue fewer but more accurate forecasts compared to independent analysts. This effect is stronger in firms with a larger control-ownership wedge, where agency conflicts are likely more pronounced. Overall, our findings underscore the role of analysts during periods of uncertainty and contribute to the literature on corporate governance and financial intermediation.