Do Director Networks Help Managers Forecast Better?

• 成果类型: Article
• 署名作者: Schabus, Mario
• 署名单位: Michigan State University; Michigan State University's Broad College of Business
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0074
• 发表日期: 2022
• 页码: 397-426
• 关键词: CORPORATE GOVERNANCE; EARNINGS FORECASTS; voluntary disclosure; boards; association; specification; environment; centrality; inference; accuracy

摘要

I examine whether directors' superior access to information through their board network improves the accuracy of firms' forecasting. Managers may benefit from well-connected directors (i.e., board centrality) as they may have limited insight into market developments or decision-making processes of other firms beyond knowledge specific to their firm. Employing a sample of U.S.-listed companies, I separately examine the effect of within-firm variation in direct and indirect board connections on management earnings forecast accuracy. The study contributes by showing that higher-degree connections can have an economically significant effect on the accuracy of management forecasts, regardless of firms' board interlocks. Further analyses point toward well-connected directors' ability to provide managers with valuable advice in a forecasting context, which complements directors' more extensively studied role in preventing managerial expropriation.