STAR‐ANALYSTS' FORECAST ACCURACY AND THE ROLE OF CORPORATE GOVERNANCE

In this article we examine whether star‐analysts have better forecasting abilities than non‐star‐analysts. Our results reveal that star‐analysts' earnings forecasts outperform their peers' forecasts. Because the level of corporate governance plays an important role for the general level of forecast accuracy, we furthermore investigate whether star‐analysts benefit from higher levels of governance. Our findings suggest that forecast accuracy of star‐analysts increases with the level of both country‐ and company‐specific corporate governance. Investors in capital markets do not seem to be aware of this fact because they do not react differently to forecasts issued by star‐analysts compared to those of non‐star‐analysts.