Do foreign investors crowd out sell‐side analysts? Evidence from China

This paper examines whether foreign investors (FIs) affect the information production of analysts. Based on China's stock market, we find that FIs significantly reduce analysts’ coverage. Such negative association is more pronounced in firms with a high level governance and disclosure varies analyst characteristics. We also identify two possible economic mechanisms: channel channel. Further tests suggest as crowd out analysts, number research reports brokerage site visits decreased, but forecast accuracy improved, indicating demand supply are generally equilibrium. further address endogeneity issue using change-on-change analysis quasi-natural experiment, Shanghai–Hong Kong Stock Connect (S-HKSC), results still hold. Overall, our present evidence potential by FIs, providing policy implications highlighting positive effect open-door capital markets.