The Influence of Corporate Governance Ratings on Buy-Side Analysts' Earnings Forecast Certainty: Evidence from the United States and the United Kingdom (Retracted)

Abstract

ABSTRACT The current study investigates how corporate governance ratings affect the certainty of buy-side analysts' earnings forecasts. Nineteen financial analysts from the United States (U.S.) and 17 from the United Kingdom (U.K.) participated in a 1 × 2 (corporate governance ratings: below or above industry average) within-participant experiment. We find that, on average, analysts exhibit more certainty in their range forecasts when the corporate governance rating is above average, relative to below average. We also observe a significant interaction between the corporate governance ratings and country, indicating that U.K. analysts exhibit stronger responses to a below average rating than U.S. analysts, while responses to an above average rating are not significantly different between the two countries. These results suggest a need to investigate cultural or other factors that can impede the seamless integration of national capital markets into a unified global financial network. Data Availability: Available upon request.