The association between corruption and analyst coverage.

Corruption is a social evil and a widely spread unethical practice in many countries, to a different extent, around the world. Although the literature on corruption at the country level is rich, relatively fewer studies have focused on the impact of corruption at firm level due to data limitations. This study contributes to the literature by providing empirical evidence on the impact of country-level corruption and firms’ self-reported policies for combating bribery on the number of analysts following a firm. It employs a panel data analysis on a sample of S&P Global 1200 companies for the years 2010 to 2015. The results show that companies that operate in clean countries, i.e. countries with low level of corruption, attract high analyst coverage. The results also show that companies that adopt policies to tackle corruption at firm level stimulate high analyst coverage. However, firms’ efforts to tackle corruption cannot mitigate the negative impact of high corruption at country level on analyst coverage. These results send a warning message to decision makers that country-level corruption is damaging the economic performance of firms in terms of low analyst coverage