Guidance, Governance, and Equity Prices

53 Pages Posted: 8 Jul 2019

See all articles by Amir Rubin

Amir Rubin

Simon Fraser University (SFU) - Beedie School of Business; Interdisciplinary Center (IDC) Herzliyah

Alexander Vedrashko

Simon Fraser University - Beedie School of Business

Date Written: July 4, 2019

Abstract

We introduce a measure of corporate governance based on the degree of transparency and managerial opportunism in firms’ guidance release policy. Firms with a good quality of guidance governance have better performance than firms with a poor quality of guidance governance and firms that do not provide guidance. We also find a causal negative relation between leverage and the quality of guidance governance during the financial crisis. Overall, firms’ guidance release policies are heterogeneous in terms of their governance-related characteristics, and providing guidance is a net positive for firms only if it is done in a consistent and transparent manner.

Keywords: Guidance, Governance, Disclosure, Financial Crisis, Leverage, Timing, Transparency

JEL Classification: G12, G14, L20, M41

Suggested Citation

Rubin, Amir and Vedrashko, Alexander, Guidance, Governance, and Equity Prices (July 4, 2019). Available at SSRN: https://ssrn.com/abstract=3414826 or http://dx.doi.org/10.2139/ssrn.3414826

Amir Rubin

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150
Israel

Alexander Vedrashko (Contact Author)

Simon Fraser University - Beedie School of Business ( email )

Beedie School of Business
8888 University Dr.
Burnaby, British Columbia V5A1S6
Canada
778-782-3471 (Phone)

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