Does Corporate Governance Matter for Financial Analysts? Evidence from Tunisia

This article examines the link between corporate governance mechanisms with both analyst forecasts accuracy and recommendations within the Tunisian Stock Exchange. Based on agency and signaling theories, good governance mechanisms aim to mitigate agency conflicts, and improve corporate transparency. As a result, they can serve as mediators in the forecasting process. Using a sample of 357 firm-year observations, there is a significant relation between governance quality, target price accuracy and recommendations, respectively. One of the most important results is that CEO compensation is an effective mechanism on which analysts can rely when setting their forecasts, especially within the financial sector.