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We use a simultaneous equations system to examine the relationship between earnings management and analyst following. We find that analysts ' decisions to follow firms and managerial decisions to manage earnings are jointly determined. Firms with lower levels of accrual-based earnings management offer a better information environment to attract analystfollowing. Analyst following, in turn, has important monitoring effects on managerial behavior and results in lower levels of both accrual-based and real earnings management. The information intermediary effect on analyst following is much weaker for expected "suspect firms " that manage their earnings continuously.
