Search Engine Ranking Factors
Authority / Reputation of Pages to which Your Website Links
Naturally, the websites to which your site links are also a very important factor in your site's search engine rankings. As you might expect, it's better to link to authoritative websites over less-authoritative websites. Linking to an authoritative site is an indication to the search engines that you might be an authority website yourself, and also helps indicate that you are not trying to spam the rankings (at least for that particular link — linking to authoritative sites will not prevent a spammy site from being detected and its ranking lowered).
Some clients (and many SEOs) have the perception that links should be hoarded, and that they should avoid linking out to other sites on general principle. SEOs will often tell you that the PageRank of a page is divided by the number of outbound links on the page, meaning that the value of a link from your page will be diminished the more outbound links you have on the page. They reason that this will also affect the rankings of the page on which you have the links. That was a reasonable theory years ago, but no longer. Today, because of the rise of TrustRank and the consequent demotion of PageRank as a best-website-evaluation metric, it's a fundamentally incorrect assumption that can prevent your website from reaching its full ranking potential. To raise its search engine rankings, a website should link out often, but only to carefully-selected, relevant websites.
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