The Association Between Web‐Based Corporate Performance Disclosure and Financial Analyst Behaviour Under Different Governance Regimes

In this study, we assert and test that the determination of corporate performance communication and financial analysts’ earnings forecasting work are closely intertwined processes. The resulting endogeneity in capital markets’ information dissemination and use is strongly influenced by a country's governance regime. Results from simultaneous equation regressions show significant interrelationships between financial analysts’ activities and corporate disclosure transparency for North American firms. Moreover, analyst following underlies corporate disclosure, which ultimately leads to a reduction in the dispersion of analysts’ earnings forecasts. In contrast, capital markets’ information dynamics for continental European firms are much weaker.