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Author: Nurwati A. Ahmad-Zaluki
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper aims to extend the research on the Malaysian IPO management earnings forecasts by examining the impact of corporate governance mechanisms and earnings forecasts accuracy. It seeks to investigate whether effective corporate governance is a credible signal of improving the quality of financial information. A sample of 235 IPO companies that went public during the period 1999-2006 was used. Absolute forecast error was used to proxy for earnings forecast accuracy and to represent financial disclosure quality. Companies with a higher percentage of non-executive directors in the audit committees and larger audit committee size exhibit greater forecast accuracy. The accuracy of IPO earnings forecast is also positively influenced by the use of brand-name auditor. The results suggest that effective corporate governance is a credible signal of improving the quality of financial information. The role of audit committee as financial monitors as suggested by the agency theory supports this study. The results are consistent with the belief that effective corporate governance is associated with higher financial disclosure quality. The results also support the decisions made by Malaysian regulators such as the Securities Commission to enhance the quality of financial disclosure by revising the Malaysian Code on Corporate Governance to encourage public companies to implement good governance practices such as audit committee independence.
Author: Nurwati A. Ahmad-Zaluki
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper aims to extend the research on the Malaysian IPO management earnings forecasts by examining the impact of corporate governance mechanisms and earnings forecasts accuracy. It seeks to investigate whether effective corporate governance is a credible signal of improving the quality of financial information. A sample of 235 IPO companies that went public during the period 1999-2006 was used. Absolute forecast error was used to proxy for earnings forecast accuracy and to represent financial disclosure quality. Companies with a higher percentage of non-executive directors in the audit committees and larger audit committee size exhibit greater forecast accuracy. The accuracy of IPO earnings forecast is also positively influenced by the use of brand-name auditor. The results suggest that effective corporate governance is a credible signal of improving the quality of financial information. The role of audit committee as financial monitors as suggested by the agency theory supports this study. The results are consistent with the belief that effective corporate governance is associated with higher financial disclosure quality. The results also support the decisions made by Malaysian regulators such as the Securities Commission to enhance the quality of financial disclosure by revising the Malaysian Code on Corporate Governance to encourage public companies to implement good governance practices such as audit committee independence.
Author: Alexander Gabriel Kerl
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
This paper examines whether star-analysts have better forecasting abilities than non-star-analysts. Our results reveal that star-analysts' earnings forecasts outperform their peers' forecasts. Because the level of corporate governance plays an important role for the general level of forecast accuracy, we furthermore investigate whether star-analysts benefit from higher levels of governance. Our findings suggest that forecast accuracy of star-analysts increases with the level of both country- and company-specific corporate governance. Investors in capital markets do not seem to be aware of this fact because they do not react differently to forecasts issued by star-analysts compared to those of non-star-analysts.
Author: Carol Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
This study investigates whether effective audit committees influence the association between management earnings forecasts and the properties of analysts" forecasts. We posit that this influence on the part of an audit committee would likely result from increased responsibility for monitoring voluntary disclosure. Using the four attributes that the Blue Ribbon Committee (1999) and prior research suggest as being indicative of audit committee effectiveness, we find that analysts" forecasts exhibit higher accuracy and lower dispersion with the issuance of management forecasts for those firms employing audit committees that are composed exclusively of independent directors, include an accounting expert, and act with due diligence. We also find that effective audit committees strengthen the association between management and analyst forecast accuracy. Our evidence, therefore, supports the notion that effective corporate governance influences the reliability of voluntary disclosure, and thereby benefits the users of financial information.
Author: Kwadwo N. Asare
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
This study examines the influence of managerial power on analysts' earnings forecast accuracy. CEO/Chairperson duality and voting power of management on the board are used as proxies for managerial power. After controlling for key variables that have been shown to affect analysts' forecast accuracy in prior literature, this study indicates that managerial power is positively associated with analysts' earnings forecast errors for large firms, but not for small firms. The non-significant association between managerial power and forecast accuracy for small firms suggests that managerial power presents relatively less agency problems for small firms, while the inverse relationship between managerial power and forecast accuracy for large firms indicates that the managerial power dimension of corporate governance is a potential source of significant agency problems for large firms.
Author: Minna Yu
Publisher:
ISBN: 9780549075219
Category :
Languages : en
Pages : 132
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Book Description
Abstract not available.
Author: Joanna Lizińska
Publisher: Taylor & Francis
ISBN: 1040104150
Category : Business & Economics
Languages : en
Pages : 235
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Book Description
In today's dynamic landscape of accounting, corporate finance, and business management, earnings management has assumed paramount importance. Transparent and reliable accounting information is crucial for accurate corporate performance forecasting and financial decision-making. This book uniquely discusses practical earnings management methods within the accounting and taxation realms. It is supported by extensive international evidence linking informativeness of financial reports to companies’ financial decisions. Delving into the earnings management process, this book provides profound insights into how profits can be influenced through accounting choices and real business transactions. Real-life case studies will undoubtedly facilitate the understanding of accounting and taxation methods. Additionally, it unravels key elements of corporate finance puzzles related to the transparency of financial reports, including the macroeconomic environment, profit thresholds, cash management, audit quality, financing decisions, and financial health. With broad empirical evidence from various European countries, it multidimensionally explores the important link between the quality of information in financial statements and trade-offs behind financial decisions. The book serves as a valuable reference for international researchers in corporate finance, accounting, and corporate governance. It is also a powerful tool for business practitioners, including owners, lenders, auditors, regulatory and professional bodies, business partners, or other market participants. For those seeking the latest insights on earnings management, those producing or assessing accounting information, and those using financial reports in their research or business practice, this book is a must-read.
Author: Michael B. Clement
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper presents evidence for international markets about the characteristics of financial analysts who are able to provide more accurate earnings forecasts than their peers. The evidence is provided for ten individual countries and for country groups formed on the basis of a similar culture and corporate governance. While prior studies document that forecast accuracy in the U.S. is associated with several analyst characteristics, this topic has not been investigated in an international setting. We predict that differences in culture and corporate governance will cause the influence of some of the characteristics to differ by country. We find that relative forecast accuracy is influenced by years of experience, size of the analyst's employer, and frequency of forecast issuance in many of the countries and show that the significance of experience and employer is conditional on the type of culture and corporate governance of the country.
Author: Rylon Malcolm Richards
Publisher:
ISBN:
Category : Corporations
Languages : en
Pages : 288
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Book Description
Author: Ran Barniv
Publisher:
ISBN:
Category :
Languages : en
Pages : 45
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Book Description
We test the ability of analyst characteristics to explain relative forecast accuracy across legal origins (common law versus civil law). Common law countries generally have more effective corporate governance mechanisms, including stronger investor protection laws and inputs provided through higher-quality financial reporting systems. In this type of environment, investors are more willing to compete for superior investment decisions because they expect to be equitably rewarded, and investors are more likely to demand information about accounting earnings because earnings have more value relevance. The increased demand by investors for earnings information increases the economic incentives of analysts to provide more accurate earnings forecasts. We predict that analysts with superior ability and resources in common law countries will more consistently outperform their peers because appropriate market-based incentives exist. In civil law countries, where the demand for earnings information is reduced because of weaker corporate governance mechanisms and lower-quality financial reporting, we predict that analysts with superior ability will less consistently provide superior forecasts. Results are consistent with our expectations and suggest an association between legal and financial reporting environments and analysts' forecast behavior.
Author: Yoshinori Shimada
Publisher:
ISBN:
Category :
Languages : en
Pages : 69
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Book Description
This paper examines how management forecasts, the cost of equity capital and corporate governance are related, using Japanese data. As management forecasts, capital investment forecasts as well as earnings forecasts are comprehensively available in Japan. They reveal the following: First, better corporate governance systems enhance the quality of earnings forecasts, but do not improve that of capital investment forecasts. Second, firms with more precise earnings forecasts can enjoy lower cost of equity capital. Meanwhile, the precision of capital investment forecasts has no relation with the cost of equity capital. Finally, the precision of capital investment forecasts has a negative influence on the cost of capital as long as corporate governance is poorly built. These findings suggest that capital investment forecasts provide informativeness that is totally different from that in earnings forecasts to investors' valuation. The precision of earnings forecasts is a substitute for the quality of corporate governance and that of capital investment forecasts plays a complementary role, making up for the information shortcomings arising out of the low quality of corporate governance.
