Management earnings forecasts and the quality of analysts' forecasts: The moderating effect of audit committees
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AbstractThis 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. © 2011 Elsevier Ltd.
All Author(s) ListCarol Liu M.H., Zhuang Z.
Journal nameJournal of Contemporary Accounting and Economics
Volume Number7
Issue Number1
PublisherElsevier BV
Place of PublicationNetherlands
Pages31 - 45
LanguagesEnglish-United Kingdom
KeywordsAnalysts, Audit committees, Corporate governance, Management forecasts

Last updated on 2020-01-06 at 23:43