Analysts' forecast properties, concentrated ownership and legal institutions

In-Mu Haw*, Simon S. M. Ho, Bingbing Hu, Woody Wu

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    13 Citations (Scopus)
    13 Downloads (Pure)


    Existing research indicates that firms with concentrated ownership structures are associated with poor financial reporting quality. This study investigates whether and how the divergence between control and cash-flow rights of controlling owners affects the effectiveness of analyst forecasting activities, and whether the effect varies with country-level legal institutions. Using a broad firm-level ownership data set for twenty-two economies, we find that control-cash flow divergence, on average, has no measurable effect on analysts' forecast properties across countries with varying legal institutions. We document rather weak detrimental effect of control divergence on forecast properties only in a small set of countries with weak legal institutions. Overall, our results indicate that the agency problems embedded in concentrated ownership structures do not always impede the private information production by analysts, which complements the previous evidence of the impact of concentrated ownership structures on corporate disclosures.

    Original languageEnglish
    Pages (from-to)235-259
    Number of pages25
    JournalJournal of Accounting, Auditing and Finance
    Issue number2
    Publication statusPublished - Apr 2010

    Scopus Subject Areas

    • Accounting
    • Finance
    • Economics, Econometrics and Finance (miscellaneous)

    User-Defined Keywords

    • Control-cash flow divergence
    • Forecast accuracy
    • Forecast dispersion
    • Legal institutions


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