The Relationship between Managers ' Expectations Stickiness and Future Stock Returns Considering Corporate Governance Ratings

Predicting stock returns has always been one of the most important issues in financial markets. The information provided by executives helps investors make optimal decisions. Managers' biases misrepresent information and lead to inaccurate predictions and, consequently, wrong decisions. Corporate governance is the management and control of an organization's operations to maximize shareholder interest.
Corporate governance has been created with a view to overseeing the opportunistic behaviors of managers, with the aim of reducing the conflict of interest between shareholders and managers, which can be an important factor in increasing the accuracy of managers' forecasts and driving them to provide accurate. The purpose of this study is to investigate the role of corporate governance in reducing the impact of managers' expectations on future stock returns. An index Topsis was developed to rank sample companies based on corporate governance during 2011-2018. The index consists of 8 criteria for dual role of manager, percentage of institutional shareholders, ownership concentration, number of audit committee members, number of board meetings, ownership structure and size of board. The Fama and Fringe three-factor model is also used to calculate future stock returns. Research findings Using data from 110 listed companies using multivariate regression show that Managers ' Expectations Stickiness to information has provided smooth information to shareholders. Predict more smoothly and consistently and predict future stock returns. Tuse, there is a positive and significant relationship between Managers ' Expectations Stickiness and stock returns, but in firms with strong corporate governance, such effects decrease.