Department of Banking and Financial Management
University of Piraeus

Academic Seminar Series

Thursday, April 25^th, 2024 / Time: 16:15 – 17:30, Online

The Market Informativeness of Analyst Forecasts in Family Firms

Olga Chara Pavlopoulou

Athens University of Economics and Business

Abstract

Analyzing an international sample of listed firms during 2007-2019, this study is the first to examine the market informativeness of financial analyst news issued for family-owned corporations and offer evidence on whether family control affects the way the markets value public information. The empirical findings document that the incremental information contained in the analysts’ earnings news of family firms is priced by the market by at least 50% more than that of non-family firms with the pricing increasing further for family firms that have also issued management guidance for the reference fiscal period. Drawing from the agency and socioemotional wealth preservation theories, we propose that one primary driving factor of the increased value relevance of analyst news in family firms is the superiority of information contained in the management guidance issued by those firms. Disaggregating analyst news into management guidance and residual information components empirically supports this conjecture. As the financial analysts seem to under-react to the management guidance issued by family firms, particularly following negative guidance surprises, the increased pricing may also indicate that investors are aware of the superiority of forward-looking information contained in the management guidance of family firms and over-price their analyst news to correct the analyst under-reaction tendency. Several other theoretical hypotheses that explain the findings and may further enhance the management guidance hypothesis are proposed (analyst effort, incentives, analyst reliance hypothesis).

Dr. Pavlopoulou is a Lecturer and Postdoctoral Researcher at the Athens University of Economics and Business (AUEB). She holds a PhD in Financial Accounting from AUEB, MPhil in Finance from the University of Cambridge, and Bachelor’s Degree in Economics from AUEB. Her research interests primarily lie at the intersection of capital markets-based accounting with finance and microeconomics. Her research has been presented at international conferences and published in international academic journals such as The European Journal of Finance and the International Review of Financial Analysis. Dr. Pavlopoulou has professional experience in the banking and corporate sectors, is a CFA charterholder, Certified Securities & Markets Analyst (level δ’), Certified Accountant, and Certified Financial Advisor in the UK.

This seminar will be online on Teams. Click here to attend