Ownership structure and forecast accuracy in Spain

Abstract

This article examines how analysts respond to specific ownership structure characteristics by studying the accuracy of their forecasts after the release of the first Spanish corporate governance code and before IFRS were adopted. Specifically, we analyse the influence of ownership concentration, bank ownership and insider ownership on analyst forecast errors. Overall the results show a positive and significant influence of bank ownership on analyst forecast accuracy, which suggests that bank ownership leads to closer monitoring of management and a reduction in analyst forecast errors. However, the presence of large shareholders and insiders in the ownership structure of the firm does not significantly affect the accuracy of financial analysts. This research provides investors with a more refined sense of how analyst forecasts might be affected through the composition of the ownership structure in a context of high concentration of ownership, relevant presence of banks in firms as creditors and shareholders, and local GAAP.