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The Effects of Corporate Governance and Product Market Competition on Analysts' Forecasts: Evidence from the Brazilian Capital Market

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  • Almeida, José Elias Feres de
  • Dalmácio, Flávia Zóboli

Abstract

We investigate how the interaction between product market competition and firm-level corporate governance enhances the accuracy of analysts' forecasts and reduces the forecasts' deviation. Using a sample of Brazilian public firms covered by analysts, we find that competitive industries provide incentives to increase the flow of information, but not necessarily to enhance its quality. However, strong corporate governance enhances the financial reporting process and consequently the quality of analysts' forecasts. Our main evidence shows that the analysts who cover firms in more highly competitive industries with strong corporate governance are the most accurate.

Suggested Citation

  • Almeida, José Elias Feres de & Dalmácio, Flávia Zóboli, 2015. "The Effects of Corporate Governance and Product Market Competition on Analysts' Forecasts: Evidence from the Brazilian Capital Market," The International Journal of Accounting, Elsevier, vol. 50(3), pages 316-339.
    • Handle: RePEc:eee:accoun:v:50:y:2015:i:3:p:316-339
    DOI: 10.1016/j.intacc.2015.07.007
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