An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Hueiling Chen
Department of Finance National Central University

Hsiou - Wei W. Lin
National Taiwan University

Chan - Jane Lin
National Taiwan University

Abstract: This study examines whether analysts’decision to follow a commercial bank is related to their characteristics. We also investigate whether the forecast horizon and coverage intensity are associated with analysts’ characteristics. Since difficulty of assessing asset value and leverage are variables to the volatility of the bank share prices, we decompose costs of analyst following a bank into difficulty and leverage. The empirical results show that high ability or experienced analysts choose to follow commercial banks with low leverage regardless of whether the headquarter of the commercial bank and the branch office of brokerage house are at the same region. High ability or experienced analysts also prefer to cover banks with high asset risk when the commercial banks and brokerage house are at the same region. Moreover, we find that analysts’ characteristics and forecast horizons are significantly positively correlated. Finally, analysts’characteristics are found to be

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