Do Better-Governed Firms Make More Informative Disclosures? Canadian Evidence
28 Pages Posted: 7 Feb 2006
Date Written: May 2007
We investigate the link between the informativeness of corporate disclosures and firms' corporate governance structures. Using a Canadian sample of firms rated in the November 2004 Board Shareholder Confidence Index, we examine whether corporate governance is a significant influence on the frequency of a firm's disclosures, on analyst behaviour and on the timeliness of price discovery. We find Canadian firms with better governance structures release more documents to the stock market. These firms also attract a larger following of analysts, and their share prices integrate value-relevant information more rapidly. Overall our results confirm other evidence suggesting corporate governance can play a significant role in determining the efficiency of a country's equity market.
Keywords: Corporate governance quality, Disclosure frequency, Analysts' forecasts, Price discovery, Timeliness
JEL Classification: G30, G38, M40
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