ANALYSTS' EARNINGS COVERAGE AND NON-REPORTING BIAS DURING THE ASIAN FINANCIAL CRISIS

Analysts are known to give grossly optimistic earnings forecasts for Asian firms during the 1997-1998 financial market crises. We examine whether the absence of forecasts from analysts with the lowest expectations could contribute to the observed bias. We find evidence consistent with a non-reporting strategy, where some analysts chose not to release forecasts or updates. We find that analysts used the non-reporting earlier in Korea in 1997, and later in Indonesia, Malaysia and Thailand. The analysts seemed to follow two reporting strategies during the crisis. They would maintain or increase coverage, with over optimistic earnings forecasts, for firms that were large, and possibly influential. or for safer firms that did not fare too badly during the crisis. On the other hand, they would use the non-reporting strategy for firms that were expected to fare poorly. We verify that our evidence on the non-reporting strategy was not due to possible attrition in the number of brokerage firms or listed firms during the crisis.