Analyst Coverage of Private Firms

This study examines the information content of analyst reports for private firms. Using a novel sample of debt analyst reports for privately-held firms with public debt, I find that the bond market reaction to debt analyst reports is larger for private firms than public firms. Further, in cross-sectional analyses, I find that debt reports with more forward-looking information are associated with larger increases in bond trading volume for private firms. Finally, I find that report quality and optimistic bias are similar across private and public firms. Collectively, my findings document that analysts play an important information role for private firms and shed light on the relation between the existing information environment and the informativeness of analyst reports.