Linking out to authoritative and high quality resources for information that is relevant to your is a strategy that can give you a great SEO boost. Citations send signals of trust and quality. Google’s goal is to help people find the information they are looking for. When you position yourself as a great resource for disseminating information on your chosen subject matter, you get an authority boost. Of course you don’t want to link out to direct competitors, but linking out to authoritative organizations, governing bodies or information resources, indicates that your site is a good resource.
However, if you link out to content that is off topic, or sites that Google sees as low quality or spammy, then those links can really hurt your trust and devastate your rankings.
So, make sure that you look for ways to include citations and out-links to relevant and reputable sites.
If you have an advertising or affiliate relationship with the site that you are outlining to, make sure that you always “no follow” the links. Always. Otherwise you could be risking a Google penalty. Having some % of “no follow” links on your site actually adds legitimacy and improves your TrustRank.