The Effects of Corporate Governance and Product Market Competition on Analysts’ Forecasts: Evidence from the Brazilian Capital Market

The International Journal of Accounting Symposium 2014, Forthcoming

37 Pages Posted: 31 May 2015

See all articles by Jose Elias Feres de Almeida

Jose Elias Feres de Almeida

Federal University of Espirito Santo (UFES)

Flávia Dalmácio

University of Sao Paulo (USP) - Faculty of Economics, Administration and Accounting of Ribeirão Preto (FEARP)

Date Written: June 24, 2014

Abstract

We investigate how the interaction between product market competition and firm-level corporate governance enhances the accuracy of analysts’ forecasts and reduces the forecasts’ deviation. Using a sample of Brazilian public firms covered by analysts, we find that competitive industries provide incentives to increase the flow of information but not necessarily to enhance its quality. However, strong corporate governance enhances the financial reporting process and consequently the quality of analysts’ forecasts. Our main evidence is that the analysts who cover firms in higher competitive industries with strong corporate governance are the most accurate.

Keywords: product market competition, corporate governance, accuracy of analysts’ forecasts

JEL Classification: D40, D82, D84, G29, G14, G34, G30, M41

Suggested Citation

Almeida, Jose Elias Feres de and Dalmácio, Flávia, The Effects of Corporate Governance and Product Market Competition on Analysts’ Forecasts: Evidence from the Brazilian Capital Market (June 24, 2014). The International Journal of Accounting Symposium 2014, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2612208

Jose Elias Feres de Almeida (Contact Author)

Federal University of Espirito Santo (UFES) ( email )

Av. Fernando Ferrari, n. 514, Goiabeiras
Centro de Ciências Jurídicas e Econômicas
Vitoria, Espírito Santo 29075-910
Brazil
+5527992248737 (Phone)

Flávia Dalmácio

University of Sao Paulo (USP) - Faculty of Economics, Administration and Accounting of Ribeirão Preto (FEARP) ( email )

Av. Bandeirantes 3900 - Monte Alegre
Ribeião Preto, 14040-900
Brazil

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