The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis

34 Pages Posted: 8 May 2006

See all articles by Irene Karamanou

Irene Karamanou

University of Cyprus - Department of Public and Business Administration

Nikos Vafeas

University of Cyprus

Date Written: 2005-01-06

Abstract

We study how corporate boards and audit committees are associated with voluntary financial disclosure practices, proxied here by management earnings forecasts. We find that in firms with more effective board and audit committee structures, managers are more likely to make or update an earnings forecast, and their forecast is less likely to be precise, it is more accurate, and it elicits a more favorable market response. Together, our empirical evidence is broadly consistent with the notion that effective corporate governance is associated with higher financial disclosure quality.

Suggested Citation

Karamanou, Irene and Vafeas, Nikos, The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis (2005-01-06). Journal of Accounting Research, Vol. 43, pp. 453-486, June 2005. Available at SSRN: https://ssrn.com/abstract=876678 or http://dx.doi.org/10.1111/j.1475-679X.2005.00177.x

Irene Karamanou (Contact Author)

University of Cyprus - Department of Public and Business Administration ( email )

75 Kallipoleos Street
P.O. Box 20537
Nicosia CY-1678
CYPRUS
+357 2 892471 (Phone)
+357 2 892460 (Fax)

Nikos Vafeas

University of Cyprus ( email )

75 Kallipoleos Street
Department of Public & Business Administration
Nicosia CY 1678
Cyprus
+357 2 892-256 (Phone)
+357 2 339-063 (Fax)

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