The Effects of Corporate Governance on Information Disclosure, Timeliness and Market Participants’ Expectations
Lancaster University - Department of Accounting and Finance
Philip R. Brown
University of Western Australia - Department of Accounting and Finance; University of New South Wales - Australian School of Business; Lancaster University - Department of Accounting and Finance; Financial Research Network (FIRN)
University of Western Australia - Faculty of Economics & Commerce
Lancaster University Management School
August 1, 2012
Using a sample of Canadian firms for the period 2002-2007, we examine whether Corporate Governance (CG) has a significant influence on the frequency of firms’ disclosures, the timeliness of price discovery or on market participants’ (analysts’) behavior in Canada. Our models use both aggregate and underlying measures of CG to help identify which particular aspects of CG are more influential. Our results suggest only certain components of CG are associated with the number of releases to the stock market and the timeliness of information discovery in firm’s stock price. With regard to analysts’ earnings forecasts evidence suggests better CG results in more informative disclosures; the aggregate CG measure is associated with greater forecast accuracy, lower dispersion in forecasts and greater analyst following. Our results confirm CG can play a significant role in determining the efficiency of a country’s equity market.
Number of Pages in PDF File: 48
Keywords: corporate governance, disclosure frequency, analysts’ forecasts, price discovery, timeliness
JEL Classification: G30, G38, M40
Date posted: August 2, 2012
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