Does analyst information influence the cost of debt? Some international evidence

We examine the contribution of analyst forecasting accuracy in reducing the average total cost of debt to firms. Our results reinforce the importance of analyst accuracy as a mechanism for reducing information asymmetries in the market, which is important to increase firms' access to available investment funding. A significant level of institutional and bank-held ownership serves as a substitution mechanism which mitigates the capacity of analyst accuracy to reduce information risk. External governance mechanisms also moderate the role played by analyst accuracy in the reduction of the cost of corporate debt. Our empirical findings are robust to different model specifications including the potential effect of the legal origin, to the consideration of an alternative proxy for the total cost of debt, to the inclusion of additional analyst-characteristics and stock-level characteristics.