Optimism in analysts’ recommendations and corporate governance : evidence from Asian emerging markets

Dissertant

Mustashi, Sana

Thesis advisor

Faruq, Umar

University

Al Akhawayn University

Faculty

The School of Business Administration

University Country

Morocco

Degree

Master

Degree Date

2010

English Abstract

The aim of this paper is to document the relationship between optimism in analysts’ recommendations and corporate governance.

Our results suggest sufficient statistical evidence that there is a significantly positive relationship between analysts’ optimism and firms’ corporate governance mechanisms.

Good corporate governance implicates more information disclosure, and so lower information asymmetry faced by analysts.

Hence, better governance practices induce analysts to issue more favorable recommendations relative to firms with more asymmetric information.

The obtained results are more significant for small firms than for large ones.

This is mainly due to the fact that the large firms’ sample is characterized with low corporate governance variation.

Optimism in analysts’ recommendations may have important implications on short-term stock returns and effectiveness of governance reforms between the pre- and post-crisis periods.

Our findings illustrate that 14-day and 28-day stock returns following the analysts’ recommendations are mainly explained by optimism of analysts rather than the buy and sell recommendations.

Also, we show that corporate governance by itself explains more than 50% of the optimism difference between the pre- and post-crisis periods.

Main Subjects

Business Administration
Financial and Accounting Sciences

Topics

• Stocks
• Asia
• Corporate governance

No. of Pages

29

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-628954