Corporate Governance, Product-Related Voluntary Disclosure and Analysts’ Forecasts Properties

Abstract

Using a sample of US biotech firms, this paper examines the joint impact of product-related voluntary disclosure and corporate governance on a firms’ information environment, specifically on analysts forecast accuracy, dispersion, precision of public and private information. Moreover, we investigate whether voluntary disclosure was consistently disclosed over time. Our findings, shows that the quality of corporate governance affects information transparency and play a role in reducing the uncertainty associated with future firms’ performance by increasing the precision of analysts’ common information and forecast accuracy, only when voluntary disclosure is constant over time. Analysts forecast dispersion decreases when more independent directors sit on the board. Voluntary disclosure and corporate governance quality are two mechanisms that act as complement to improve the quality of information available to financial analysts.