Expectations management and beatable targets: how do analysts react to explicit earnings guidance?
Article
Article Title | Expectations management and beatable targets: how do analysts react to explicit earnings guidance? |
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ERA Journal ID | 19081 |
Article Category | Article |
Authors | Cotter, Julie (Author), Tuna, Irem (Author) and Wysocki, Peter D. (Author) |
Journal Title | Contemporary Accounting Research |
Journal Citation | 23 (3), pp. 593-624 |
Number of Pages | 32 |
Year | 2006 |
Place of Publication | Toronto, Canada |
ISSN | 0823-9150 |
1911-3846 | |
Digital Object Identifier (DOI) | https://doi.org/10.1506/FJ4D-04UN-68T7-R8CA |
Web Address (URL) | http://www.caaa.ca/CAR/BackIssues/vol23num3/index.html |
Abstract | This study investigates security analysts' reactions to public management guidance and assesses whether managers successfully guide analysts toward beatable earnings targets. We use a panel dataset between 1995 and 2001 to examine the fiscal-quarter-specific determinants of management guidance and the timing, extent, and outcomes of analysts' reactions to this guidance. We find that management guidance is more likely when analysts’ initial forecasts are optimistic, and, after controlling for the level of this optimism, when analysts’ forecast dispersion is low. Analysts quickly react to management guidance and they are more likely to issue final meetable or beatable earnings targets when management provides public guidance. Our evidence suggests that public management guidance plays an important role in leading analysts toward achievable earnings targets. |
Keywords | analysts; earnings guidance; expectations management; management earnings forecasts |
ANZSRC Field of Research 2020 | 350103. Financial accounting |
380109. Industry economics and industrial organisation | |
380203. Economic models and forecasting | |
Public Notes | Files associated with this item cannot be displayed due to copyright restrictions. |
Byline Affiliations | School of Accounting, Economics and Finance |
University of Pennsylvania, United States | |
Massachusetts Institute of Technology, United States |
https://research.usq.edu.au/item/9y29q/expectations-management-and-beatable-targets-how-do-analysts-react-to-explicit-earnings-guidance
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