The Relationship between the Percentage of Outside Directors and Institutional Investors with Properties of Earnings Forecast

There are significant differences in disclosure of information among firms. Identification of factors affecting management in formation disclosure is a useful research area and wide variety of    users such as: market pol icy makers, investors and academicians could take advantage of the results.
Earning forecast is important information that firms usually disclose. Corporate   governance improves   the   performance of companies and their quality of disclosure.
This empirical  research  investigated  the relationship  between properties  of  management  earning  forecast,  with  two  important corporate governance mechanism; outside directors and institutional investors.
Our sample is selected  from  listed companies in Tehran  Stock Exchange (TSE)  for  a  period  of  the  years  2003  to  2005.  The percentage of outside directors and firms aggregated common stock held by institutions are independent variables. Properties of management earnings forecasts are dependent variables. Forecast precision,  forecast  timeliness,  forecast  bias  and  the  number  of forecasts  that   is  revised  are  proxies  for  those  properties.  The control variables are: size of the firm, the firm's auditor. the  ratio of  market  to  book  value of  the  common  equity,  number of days between the  forecast date and  fiscal ending period date and good or bad news.
We established hypotheses based on the above variables and tested them by using single and Multiple Regression Analysis and Mann-Whitney U.
The result showed that; there is no significant relationship between two corporate governance mechanisms and proper ties of management earnings forecasts. The result as a whole doesn't discern any significant relationship between outside directors and in situational investors to precision, bias, timeliness of earning forecasts and revise on them.