earticle

영어

We empirically examine the relation between financial analysts' forecasting accuracy and corporate governance structures of Korean firms, and the stock price impacts of financial analysts' reports for the revisions of target stock prices and investment recommendations. We found the following interesting empirical results. First, analysts' forecasting accuracy is positively related to corporate governance structure. It implies that better governance structures improve management and accounting transparency and information environment for analysts. Second, the improved corporate governance leads to increased forecasting accuracy, probably due to enhanced corporate transparency. Third, the stock price impacts of analysts' revisions also vary by corporate governance structures. Firms with better governance structures have lower CARs. Recently in 2006, however, better governed firms have higher CARs. Fourth, upward revisions of target prices have more positive impact on stock prices than downward revisions, especially for firms with superior governance structures. The similar result is found for stock recommendation revisions. Overall,superior governance structure leads to higher firm valuation, especially in the recent year. So, we suggest that Korean firms should further improve governance structure and transparency in order to increase firm value.