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Ex Post Realization And Valuation Of Management Earnings Forecasts Managers Discretion And Characteristics Of Forecasting Firms
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Book Synopsis Ex-post realization and valuation of management earnings forecasts, manager's discretion and characteristics of forecasting firms by : Sungyu Sohn
Download or read book Ex-post realization and valuation of management earnings forecasts, manager's discretion and characteristics of forecasting firms written by Sungyu Sohn and published by . This book was released on 1992 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Credibility of Management Earnings Forecasts and Future Returns by : Norio Kitagawa
Download or read book Credibility of Management Earnings Forecasts and Future Returns written by Norio Kitagawa and published by . This book was released on 2016 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of managerial discretion over their initial earnings forecasts on future performance. First, by estimating the discretionary portion of initial management earnings forecasts (defined as discretionary forecasts) based on the findings of fundamental analysis research, we find that firms with higher discretionary forecasts are more likely to miss their earnings forecast at the end of the fiscal year and revise their forecasts downward to meet their earnings forecasts for the period, suggesting that forecast management through discretionary forecasting produces less credible management forecasts in terms of ex-post realization. Second, by using the hedge-portfolio test and regression analysis, we find that firms with higher discretionary forecasts earn consistently negative abnormal returns, suggesting that investors do not fully understand the implication of discretionary forecasts for the credibility of management earnings forecasts and thus overprice them at the forecast announcement.
Book Synopsis Ex Post Bias in Management Earnings Forecasts by : Afshad J. Irani
Download or read book Ex Post Bias in Management Earnings Forecasts written by Afshad J. Irani and published by . This book was released on 1999 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of proprietary information, disclosure-related legal liability, earnings variability, financial distress, and external financing on bias in management earnings forecasts. Bias, specifically ex post bias (as is referred to in the management forecast literature), exists if the expected value of the observed management earnings forecasts differs from actual earnings. The effect of the test variables on ex post bias is investigated by examining whether a firm's forecast error (measure of ex post bias and defined as actual earnings minus management earnings forecast) is a function of the aforementioned variables. Proprietary information, disclosure-related legal liability, and earnings variability are hypothesized to be positively associated with ex post bias, while external financing and financial distress are expected to be negatively correlated. All the independent variables are measured using public information available at the time that the financial statements are released.Using a sample of 267 management earnings forecasts released during the period 1990-95 in the first three quarters of the fiscal year, I find that these forecasts are on average optimistic. Results from the multivariate regression analysis find that three of the five factors, proprietary information, financial distress and earnings variability, are significant in explaining ex post bias. For the most part, these findings are robust across various sub-samples.
Book Synopsis Dissertation Abstracts International by :
Download or read book Dissertation Abstracts International written by and published by . This book was released on 1999 with total page 620 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Management Earnings Forecasts by : Hwa Deuk Yi
Download or read book Management Earnings Forecasts written by Hwa Deuk Yi and published by . This book was released on 1994 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis American Doctoral Dissertations by :
Download or read book American Doctoral Dissertations written by and published by . This book was released on 1991 with total page 724 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Consistency of Mandatory and Voluntary Management Earnings Forecasts and Implications for Analyst and Investor Information Processing by : Richard A. Cazier
Download or read book The Consistency of Mandatory and Voluntary Management Earnings Forecasts and Implications for Analyst and Investor Information Processing written by Richard A. Cazier and published by . This book was released on 2016 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study we examine whether managers' voluntary forecasts of future earnings are consistent with the implicit forecasts of future earnings that underlie a specific mandatory accrual, the valuation allowance. This accrual relies heavily on managerial estimation and is also based, in part, on managers' private, forward-looking information. Thus, it provides an ideal setting to investigate the interplay between voluntary and mandatory financial disclosures. By examining the consistency between the voluntary and mandatory forecasts, we are also able to provide insight into whether the predictable accrual-related bias in voluntary earnings forecasts carries over into the mandatory forecast embedded in the valuation allowance. We then investigate whether the biased voluntary earnings guidance helps analysts and investors more accurately interpret the information in valuation allowance changes about future earnings expectations. To increase the power of our tests we utilize a sample of loss firms, which frequently record valuation allowances to fully or partially offset deferred tax assets.We first document that more than 62 percent of our sample of loss firms report valuation allowance changes and management earnings guidance that convey the same basic information about future earnings (i.e., either both forecast profit or both forecast loss). Thus, these voluntary and mandatory forecasts are largely consistent with each other. We then provide evidence that managers provide overly pessimistic forecasts for observations whose valuation allowance changes signal bad news about future earnings, but overly optimistic forecasts for observations whose valuation allowance changes signal strong good news about future earnings. Finally, our results suggest that managers' biased earnings forecasts actually help analysts and investors more accurately interpret the information about future earnings in valuation allowance changes. Our findings provide new insights into actions managers can take to improve investor and analyst processing of financial statement-based tax information.
Book Synopsis Analysts' Forecasts as Earnings Expectations (Classic Reprint) by : Patricia C. O'Brien
Download or read book Analysts' Forecasts as Earnings Expectations (Classic Reprint) written by Patricia C. O'Brien and published by Forgotten Books. This book was released on 2018-02-26 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from Analysts' Forecasts as Earnings Expectations Analysts' forecasts of earnings are increasingly used in accounting and finance research as expectations data, to proxy for the unobservable market expectation of a future 'realization. 'since a diverse set of forecasts is available at any time for a given firm's earnings. Composites are used to distill the information from the diverse set into a single expectation. This paper considers the relative merits of several composite forecasts as expectations data. One of the primary results is that the most current forecast available outperforms more commonly used aggregations such as the mean or the median. Mthis result is consistent-with forecasters incorporating information from others' previous predictions into their own. It also suggests that the forecast date, which previous research has largely ignored, is a characteristic relevant for distinguishing better forecasts. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Book Synopsis Management Earnings Forecasts by : D. Eric Hirst
Download or read book Management Earnings Forecasts written by D. Eric Hirst and published by . This book was released on 2008 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we provide a framework in which to view management earnings forecasts. Specifically, we categorize earnings forecasts as having three components - antecedents, characteristics, and consequences that roughly correspond to the timeline associated with an earnings forecast. By evaluating management earnings forecast research within the context of this framework, we render three conclusions. First, forecast characteristics appear to be the least well-understood component of earnings forecasts - both in terms of theory and empirical research - even though it is the component over which managers have the most control. Second, much of the prior research focuses on how one forecast antecedent or characteristic influences forecast consequences and does not study potential interactions among the three components. Third, much of the prior research ignores the iterative nature of management earnings forecasts - that is, forecast consequences of the current period influence antecedents and chosen characteristics in subsequent periods. Implications for researchers as well as educators, managers, investors, and regulators are provided.
Book Synopsis Expectation Management Through Management Forecast - a Life of Tail Asymmetry Under Consecutive Adjustment by : Kazuo Kato
Download or read book Expectation Management Through Management Forecast - a Life of Tail Asymmetry Under Consecutive Adjustment written by Kazuo Kato and published by . This book was released on 2005 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether firm managers engage in the expectation management of their current performances through their own forecasts and consecutive adjustments. Expectation management in order to achieve positive surprises by lowering analyst forecast levels has been documented (Bernhardt and Campello 2002, for example). However, those studies are based on an implicit assumption that managers effectively communicate with analysts to induce analysts' revisions, which is plausible but difficult to directly observe by researchers. We construct a study on the management own forecasts which the Japanese Stock Exchanges ask for the listed companies; thus, we base our results on explicit and quantitative data.Our major findings are followings: (1) at the onset of fiscal year, the distribution of changes in expected earnings from prior years is skewed positively (better prospects, positive tail asymmetry). (2) But these optimistic forecasts are not necessarily materialized; surprise of earnings (earnings realization minus initial forecasts) is reversely skewed (negative tail asymmetry). (3) This phenomenon is more remarkable among firms with initial forecasts of the highest earnings changes. (4) Further, a closer examination shows that, through interim revisions, the distribution of surprises in earnings from latest forecasts prior to earnings announcement date has a little positive tail asymmetry, regardless of consecutive adjustment made until then. This cycle (optimistic forecasts - negative revisions - positive surprises) suggests the discretionary management of earnings forecasts by managers. Consistent with prior research, we also find that tendency to avoid decreases in earnings from prior year level is pervasive.
Book Synopsis Management Earnings Forecasts by : Shankar Venkataraman
Download or read book Management Earnings Forecasts written by Shankar Venkataraman and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we provide a framework in which to view management earnings forecasts. Specifically, we categorize earnings forecasts as having three components - antecedents, characteristics, and consequences - that roughly correspond to the timeline associated with an earnings forecast. By evaluating management earnings forecast research within the context of this framework, we render three conclusions. First, forecast characteristics appear to be the least well-understood component of earnings forecasts - both in terms of theory and empirical research - even though it is the component over which managers have the most control. Second, much of the prior research focuses on how one forecast antecedent or characteristic influences forecast consequences and does not study potential interactions among the three components. Third, much of the prior research ignores the iterative nature of management earnings forecasts - that is, forecast consequences of the current period influence antecedents and chosen characteristics in subsequent periods. Implications for researchers as well as educators, managers, investors, and regulators are provided.
Book Synopsis Earnings Forecasts Disclosure Regulation and Earnings Management by IPO Firms by : Bikki Jaggi
Download or read book Earnings Forecasts Disclosure Regulation and Earnings Management by IPO Firms written by Bikki Jaggi and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether a regulation on mandatory disclosure of earnings forecasts encourages managers to issue more optimistic earnings forecasts, and whether the optimistic forecasts are revised downward or the reported earnings are managed upward using discretionary accruals to reduce the forecast error. Additionally, it evaluates how investors react to earnings management and forecast revisions. The study is based on 760 forecasts issued by Taiwan IPO firms from 1991 to 2000 after the regulation to issue the earnings forecasts was imposed by the Taiwan Securities and Futures Exchange Commission (TSFEC) and it also uses a sample of 86 IPO firms prior to the issue of regulation. The results show that the IPO firms issue more optimistic forecasts than conservative forecasts. They adjust their reported earnings of optimistic forecasts upward with discretionary accruals more than revising the earnings forecasts downward, whereas they revise conservative forecasts upward more than adjusting the reported earnings downward. The results on the comparative analysis of earnings management by IPO firms before and after issuance of the TSFEC regulation provide additional support to the findings that earnings management by IPO firms increased significantly after the regulation was imposed. The results on investors' reaction to reported earnings show that investors reacted positively to higher reported earnings compared to the last revision of forecasts and they ignored the upward adjustment of reported earnings. Their reaction has been negative to downward revisions and positive to upward revisions.
Book Synopsis The Effect of Analysts' Disaggregated Forecasts on Investors and Managers by : Landon M. Mauler
Download or read book The Effect of Analysts' Disaggregated Forecasts on Investors and Managers written by Landon M. Mauler and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine whether analysts' tax forecasts are informative to investors and whether analysts' tax forecasts impact firm behavior. Using I/B/E/S data from 2002-2014, I find that investors utilize both analysts' pre- and after-tax earnings forecasts in evaluating firm performance, indicating analysts' tax forecasts are value-relevant. Furthermore, evidence that investors discount earnings management through the income tax expense is limited to firms with tax forecast coverage. In examining the impact of analysts' tax forecasts on firm behavior, I find analysts' tax forecast coverage is positively associated with quantitative and qualitative tax footnote disclosure. The results suggest that analysts' tax forecasts are value-relevant and that analysts' tax coverage impacts firm decisions related to the income tax expense account. This evidence informs academics and practitioners as to the role of analysts' tax forecasts.
Book Synopsis Why Do Managers Explain Their Earnings Forecasts? by : Stephen P. Baginski
Download or read book Why Do Managers Explain Their Earnings Forecasts? written by Stephen P. Baginski and published by . This book was released on 2014 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managers often explain their earnings forecasts by linking forecasted performance to their internal actions and the actions of parties external to the firm. These attributions potentially aid investors in the interpretation of management forecasts by confirming known relationships between attributions and profitability or by identifying additional causes that investors should consider when forecasting earnings. We investigate why managers choose to provide attributions with their forecasts and whether the attributions are related to security price reactions to management earnings forecasts. Using a sample of 951 management earnings forecasts issued from 1993 to 1996, we find that attributions are more likely for larger firms, less likely for firms in regulated industries, less likely for forecasts issued over longer horizons, more likely for bad news forecasts, and more likely for forecasts that are maximum type. Furthermore, attributions are associated with greater absolute price reactions to management forecasts, more negative price reactions to management forecasts (forecast news held constant), and a greater price reaction per dollar of unexpected earnings. Our findings hold after control for the aforementioned determinants of attributions and after control for other firm- and forecast-specific variables that are often associated with security prices.
Book Synopsis Earnings Management by : Joshua Ronen
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Book Synopsis Behavioral Corporate Finance by : Hersh Shefrin
Download or read book Behavioral Corporate Finance written by Hersh Shefrin and published by College Ie Overruns. This book was released on 2017-04-16 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Quality by : Jennifer Francis
Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
