Analyst Coverage Networks and Corporate Financial Policies.

This article investigates peer effects in corporate financial policies within analyst coverage networks, where firms are connected through common sell-side equity analysts. Using a "friends-of-friends" approach and exploiting the partial overlap of analyst coverage, the study distinguishes endogenous peer effects—firms responding directly to peers’ financial policy choices—from contextual effects driven by peer characteristics. The authors find significant and economically meaningful peer effects on leverage, equity issuance, and debt-equity choices that are distinct from industry peer effects, with stronger effects among firms connected by more experienced and influential analysts. Additionally, exogenous shocks to analyst coverage, such as brokerage closures, weaken these peer effects, supporting the role of analysts as informational intermediaries facilitating the propagation of financial policies across firms.