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The Effects of Corporate Governance on Information Disclosure, Timeliness and Market Participants’ Expectations

44 Pages Posted: 2 Aug 2012 Last revised: 2 Jun 2016

Wendy Beekes

Lancaster University - Department of Accounting and Finance

Philip R. Brown

UWA Business School, M250; Financial Research Network (FIRN)

Germaine Chin

University of Western Australia - Faculty of Economics & Commerce

Qiyu Zhang

Lancaster University Management School

Date Written: June 1, 2016

Abstract

We examine whether corporate governance has an influence on Canadian firms’ disclosure practices, the timeliness of price discovery and market participants’ (analysts’) behaviour in a study of Canadian listed companies for the period 2002-2007. Our results confirm other evidence that better-governed firms make more disclosures and their stock price discovery is more timely. This suggests a complementary association between corporate governance quality and disclosure. However, despite releasing more documents overall, we find releases from better-governed firms to the stock market are made on a less timely basis, perhaps implying a more conservative approach to the release of disclosures to the stock market. We further find that analyst following is positively associated with a firm’s corporate governance quality. In addition, for firms with better corporate governance, analysts’ Earnings Per Share forecasts are more accurate and less dispersed. More detailed analysis reveals only certain components of corporate governance are associated with disclosures and overall transparency. Taken as a whole, our results confirm corporate governance can play a significant role in determining the efficiency of a country’s equity market.

Keywords: corporate governance, disclosure frequency, analysts’ forecasts, price discovery, timeliness

JEL Classification: G30, G38, M40

Suggested Citation

Beekes, Wendy and Brown, Philip R. and Chin, Germaine and Zhang, Qiyu, The Effects of Corporate Governance on Information Disclosure, Timeliness and Market Participants’ Expectations (June 1, 2016). Available at SSRN: https://ssrn.com/abstract=2122300 or http://dx.doi.org/10.2139/ssrn.2122300

Wendy Beekes (Contact Author)

Lancaster University - Department of Accounting and Finance ( email )

Lancaster LA1 4YX
United Kingdom
++44 (0)1524 593623 (Phone)

Philip R. Brown

UWA Business School, M250 ( email )

Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Germaine Chin

University of Western Australia - Faculty of Economics & Commerce ( email )

Nedlands, Western Australia 6907
Australia

Qiyu Zhang

Lancaster University Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

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