The Value of Financial Analysts: How Analyst Coverage Affects Spanish Firms’ Financial Performance

Abstract

The study examines the relationship between analyst attention and company performance in an industry dominated by a small number of owners in Spain for the years 2015-2024. The analysis supports that more analyst coverage leads to higher ROA, proving that analysts play a key role in managing information asymmetry and governance. On the other hand, bigger firms and bigger boards decrease overall performance, showing that the size of firms can impact efficiency. These results are also confirmed by using strongly-supported 2SLS methods, and the Spanish case adds unique insights related to family-controlled companies. The research benefits the field of emerging markets and provides useful advice for regulators seeking more transparency and firms working on improving their governance.