 Board independence and analysts' forecast accuracy: R&D perspectiveAnisur Rahman, Bakhtear Talukdar and Zaifeng Steve Fan Journal of Economics and Business, 2023, vol. 127, issue C, No S0148619523000292 Abstract: Research and development (R&D) activities are essential for firm growth and profitability. However, R&D activities also exacerbate information complexity in the financial markets. Therefore, the accuracy of earnings forecasts suffers when R&D expenses are high. This study aims to examine whether board independence can mitigate the adverse effect of high R&D expenditure on analysts' forecasts. Using a sample of 11,645 annual observations from 1997 to 2016, we find that board independence improves analysts' forecast accuracy for R&D-intensive firms. The improvement is more pronounced in firms with low analyst coverage and powerful CEOs. These results are robust with an alternative measure of information asymmetry, a dynamic generalized method of moments (GMM) model and a quasi-natural experiment based on the Sarbanes-Oxley Act of 2002 to address endogeneity concerns. Keywords: Board Independence; Information complexity; Analyst forecast; R&D (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:127:y:2023:i:c:s0148619523000292 DOI: 10.1016/j.jeconbus.2023.106136 Access Statistics for this article Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter More articles in Journal of Economics and Business from Elsevier |
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