Investment and access to external finance in Europe: Does analyst coverage matter? br

We aim to determine whether analyst coverage improves European firms' access to capital markets andinvestment. Based on a data set that includes firms from several European countries between 2000 and 2015,we implement a treatment effect framework and an instrumental variables (IV) approach, in which the intensityof industry-level waves in coverage is used as an instrument for firm-level coverage. We show that analystcoverage is favorable to firms' debt and share issuance and their investment expenses. Our paper emphasizesthe key role of financial analysts in improving European firms' financial conditions.