The Determinants And Consequences Of Managerial Earnings Guidance Prior To Regulation Fair Disclosure

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The Determinants and Consequences of Managerial Earnings Guidance Prior to Regulation Fair Disclosure

Author : Amy P. Hutton
Publisher :
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (52 download)

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Book Synopsis The Determinants and Consequences of Managerial Earnings Guidance Prior to Regulation Fair Disclosure by : Amy P. Hutton

Download or read book The Determinants and Consequences of Managerial Earnings Guidance Prior to Regulation Fair Disclosure written by Amy P. Hutton and published by . This book was released on 2002 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Prior to Regulation Fair Disclosure some management spent considerable time and effort guiding analyst earnings estimates; other management did not. In this paper I examine the determinants and consequences of management's decision to work with analysts in the development of their earnings estimates using proprietary survey data from the National Investor Relations Institute. Findings suggest that when earnings are important to valuation but hard to forecast because businesses and financial transactions are complex, management is more likely to provide assistance to analysts presumably to avoid inaccurate analyst forecasts and negative earnings surprises. A comparison of guided and unguided analyst forecasts indicates that guided quarterly earnings forecasts are more accurate but also more frequently pessimistic, consistent with analysts rationally trading offbias for accuracy to retain access to management's earnings guidance. Cross-sample comparisons of analysts' stock recommendations and long-term growth forecasts provide additional support for the hypothesis that analyst objectivity and independence is affected by management's decision to provide earnings guidance. Finally, evidence from stock price reactions to deviations from the consensus forecast (the traditional measure of earnings surprises) indicates that investors distinguish between guided and unguided analyst forecasts when forming their earnings expectations. This study furthers our understanding of what factors affect management's disclosure choices and how managers' disclosure choices influence the objectivity and independence of sell-side analysts.

Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts

Author : Amy P. Hutton
Publisher :
ISBN 13 :
Total Pages : 53 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts by : Amy P. Hutton

Download or read book Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts written by Amy P. Hutton and published by . This book was released on 2005 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior to Regulation Fair Disclosure (Reg FD) some management spent considerable time and effort guiding analyst earnings estimates, often through detailed reviews of analysts' earnings models. In this paper I use proprietary survey data from the National Investor Relations Institute to identify firms that reviewed analysts' earnings models prior to Reg FD and those that did not. Under the maintained assumption that firms conducting reviews implicitly or explicitly guided analysts' earnings forecasts, I document firm characteristics associated with the decision to provide private managerial earnings guidance. Then, I document the characteristics of 'guided' versus 'unguided' analyst earnings forecasts. Findings demonstrate an association between several firm characteristics and guidance practices: managers are more likely to review analyst earnings models when the firm's stock is highly followed by analysts and largely held by institutions, when the firm's market-to-book ratio is high, and its earnings are important to valuation (high Industry-ERC R2), but hard to predict because its business is complex (high # of Segments). A comparison of guided and unguided quarterly forecasts indicates that guided analyst estimates are more accurate, but also more frequently pessimistic. An examination of analysts' annual earnings forecasts over the fiscal year does not distinguish between guidance and no guidance firms; both experience a quot;walk downquot; in annual estimates. To distinguishing between guidance and no guidance firms, one must examine quarterly earnings news: unguided analysts walk down their annual estimates when the majority of the quarterly earnings news is negative, guided analysts walk down their annual estimates even though the majority of the quarterly earnings news is positive.

The Effects of Regulation Fair Disclosure on Management Forecasts

Author : Carla Carnaghan
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Effects of Regulation Fair Disclosure on Management Forecasts by : Carla Carnaghan

Download or read book The Effects of Regulation Fair Disclosure on Management Forecasts written by Carla Carnaghan and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine management forecasts to determine whether Regulation Fair Disclosure has improved the quality and quantity of public disclosures. Management forecasts are voluntary, provide earnings guidance and are highly sought by investors and analysts. We find that the information disclosed by managers has improved in terms of frequency, specificity and verifiable information provided. We also find that Regulation Fair Disclosure has reduced information asymmetry, and information leakage prior to the release of the MEF. We find no evidence of greater returns volatility. Our results suggest that generally Regulation Fair Disclosure has achieved one of its stated goals of providing a more level playing field to all investors.

JOURNAL OF Accounting & Economics

Author :
Publisher :
ISBN 13 :
Total Pages : 832 pages
Book Rating : 4./5 ( download)

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Book Synopsis JOURNAL OF Accounting & Economics by :

Download or read book JOURNAL OF Accounting & Economics written by and published by . This book was released on 2004 with total page 832 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Detailed Management Earnings Forecasts

Author : Kenneth J. Merkley
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Detailed Management Earnings Forecasts by : Kenneth J. Merkley

Download or read book Detailed Management Earnings Forecasts written by Kenneth J. Merkley and published by . This book was released on 2014 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide archival evidence on how a particular type of supplementary information affects the credibility of management earnings forecasts. Managers often provide detailed forecasts of specific income statement line items to shed light on how they plan to achieve their bottom-line earnings targets. We assess the effect of this forecast disaggregation on the credibility of management earnings forecasts. Based on a relatively large hand-collected sample of 900 management earnings forecasts, we find that disaggregation increases analysts' sensitivity to the news in managers' earnings guidance, suggesting that analysts find the guidance more credible. More importantly, we identify several factors that influence this relation. First, disaggregation plays a more important role when earnings are otherwise more difficult to forecast. Second, disaggregation is more important after Regulation Fair Disclosure prohibited selective disclosure, especially for firms that were more affected because they had previously provided more private guidance. Finally, in contrast to common assertions in the prior literature, we find that in more recent years, disaggregation matters more for guidance that conveys bad news. Managers as well as researchers should be interested in evidence suggesting that financial analysts find disaggregation especially helpful in contexts where managers' credibility is particularly important.

Quarterly Journal of Business and Economics

Author :
Publisher :
ISBN 13 :
Total Pages : 596 pages
Book Rating : 4.E/5 ( download)

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Book Synopsis Quarterly Journal of Business and Economics by :

Download or read book Quarterly Journal of Business and Economics written by and published by . This book was released on 2004 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Earnings Guidance after Regulation Fd

Author : Ronen Feldman
Publisher :
ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Earnings Guidance after Regulation Fd by : Ronen Feldman

Download or read book Earnings Guidance after Regulation Fd written by Ronen Feldman and published by . This book was released on 2008 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates market reactions to voluntary earnings guidance provided by managers after the enactment of Regulation FD, which requires companies to disseminate material news to all investors simultaneously. More managers now issue their guidance to the public instead of disclosure to a selective group of analysts, in conformity with Regulation FD. We examine a very large set of earnings guidance disclosures based on identification of these announcements using text mining techniques.Our results indicate that guidance provided with the disclosure of earnings is not associated with significant market reactions, but guidance provided between earnings releases is associated with significant negative reactions. We further show that market reactions are consistent with the trend implied by management even when it is in the form of qualitative disclosure. Finally, we show that market reactions are stronger (more negative, typically) for NASDAQ firms than NYSE or AMEX firms, larger firms, and when the disclosure involves revenues and not earnings.

Winning Investors Over

Author : Baruch Lev
Publisher : Harvard Business Press
ISBN 13 : 142211502X
Total Pages : 394 pages
Book Rating : 4.4/5 (221 download)

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Book Synopsis Winning Investors Over by : Baruch Lev

Download or read book Winning Investors Over written by Baruch Lev and published by Harvard Business Press. This book was released on 2012 with total page 394 pages. Available in PDF, EPUB and Kindle. Book excerpt: A guide to dealing with Wall Street in order to boost a company's earnings and stock price features advice for executives on such topics as addressing investors' concerns and maintaining credibility on Wall Street.

Program and Proceedings

Author : American Accounting Association. Annual Meeting
Publisher :
ISBN 13 :
Total Pages : 288 pages
Book Rating : 4.E/5 ( download)

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Book Synopsis Program and Proceedings by : American Accounting Association. Annual Meeting

Download or read book Program and Proceedings written by American Accounting Association. Annual Meeting and published by . This book was released on 2003 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival

Author : Bin Ke
Publisher :
ISBN 13 :
Total Pages : 63 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival by : Bin Ke

Download or read book The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival written by Bin Ke and published by . This book was released on 2006 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study offers evidence on the earnings forecast bias analysts use to please firm management and the associated benefits they obtain from issuing such biased forecasts in the years prior to Regulation Fair Disclosure. Analysts who issue initial optimistic earnings forecasts followed by pessimistic earnings forecasts before the earnings announcement produce more accurate earnings forecasts and are less likely to be fired by their employers. The effect of such biased earnings forecasts on forecast accuracy and firing is stronger for analysts who follow firms with heavy insider selling and hard-to-predict earnings. The above results hold regardless of whether a brokerage firm has investment banking business or not. These results are consistent with the hypothesis that analysts use biased earnings forecasts to curry favor with firm management in order to obtain better access to management's private information.

What Guides the Guidance?

Author : Michael Tang
Publisher :
ISBN 13 :
Total Pages : 104 pages
Book Rating : 4.:/5 (95 download)

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Book Synopsis What Guides the Guidance? by : Michael Tang

Download or read book What Guides the Guidance? written by Michael Tang and published by . This book was released on 2012 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt: "I develop and explore a new dimension of earnings guidance - guidance consistency. Contrary to the conventional view that managers make an independent guidance decision each period, I find empirical support for the dynamic disclosure theory, which argues that managers consider earnings guidance as a multi-period decision and try to maintain consistency in guidance. Once I account for past guidance in a logistic model, several known guidance determinants are no longer significant in explaining management guidance decisions. In contrast, past guidance remains significant both statistically and economically across various specifications, suggesting that management guidance decisions are largely predetermined. Moreover, the guidance consistency measure is more robust than the conventional frequency-based 'habitual' variable in explaining future guidance. The results still hold in a Heckman selection model and after propensity score matching, mitigating the concern that guidance consistency is merely driven by firms operating in stable environments. Moreover, firms with a history of consistent (inconsistent) guidance are less (more) responsive to various guidance determinants, and omit guidance primarily due to lack of private information (past unsuccessful expectation management). Compared with inconsistent guiders, consistent guiders are more likely to: (a) guide earlier in the quarter; (b) bundle guidance with earnings announcements; (c) issue guidance even when analyst forecasts are already aligned with managers' own estimates; and (d) also maintain consistency in their guidance timing or specificity. After controlling for analyst forecasts before guidance, their forecasts after guidance are more likely to be aligned with guidance issued by consistent guiders than by inconsistent guiders. My evidence suggests that both managers and analysts view guidance as a multi-period decision, supporting the dynamic disclosure theory"--Page iv.

The Journal of Economic Perspectives

Author :
Publisher :
ISBN 13 :
Total Pages : 480 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis The Journal of Economic Perspectives by :

Download or read book The Journal of Economic Perspectives written by and published by . This book was released on 2003 with total page 480 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Does Quarterly Earnings Guidance Increase Or Reduce Earnings Management?

Author : Andrew Alexei Acito
Publisher :
ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.:/5 (761 download)

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Book Synopsis Does Quarterly Earnings Guidance Increase Or Reduce Earnings Management? by : Andrew Alexei Acito

Download or read book Does Quarterly Earnings Guidance Increase Or Reduce Earnings Management? written by Andrew Alexei Acito and published by . This book was released on 2011 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study adds to the earnings guidance debate by investigating whether quarterly guidance is related to two forms of earnings management: (1) benchmark beating and (2) accounting irregularities. Using a post-Regulation Fair Disclosure sample, I find that firms regularly issuing earnings guidance display a discontinuity around zero in their distribution of management forecast errors and a larger discontinuity in their distribution of analyst forecast errors compared to non-guiding firms. Multivariate tests reveal that guiding firms recognize large abnormal accruals to beat their own guidance, but not to beat analyst forecasts, whereas non-guiding firms do recognize large abnormal accruals to beat analyst forecasts. Overall, guiding firms and non-guiding firms use similar levels of abnormal accruals to beat benchmarks. I also find no statistical relation between quarterly guidance and the likelihood of accounting irregularities. In sum, the evidence shows that while guiding firms and non-guiding firms manage earnings to different benchmarks, they are similar in terms of their aggregate earnings management.

Journal of Applied Corporate Finance

Author :
Publisher :
ISBN 13 :
Total Pages : 928 pages
Book Rating : 4.E/5 ( download)

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Book Synopsis Journal of Applied Corporate Finance by :

Download or read book Journal of Applied Corporate Finance written by and published by . This book was released on 2004 with total page 928 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Earnings Management

Author : Joshua Ronen
Publisher : Springer Science & Business Media
ISBN 13 : 0387257713
Total Pages : 587 pages
Book Rating : 4.3/5 (872 download)

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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?

Earnings Forecasts Disclosure Regulation and Earnings Management by IPO Firms

Author : Bikki Jaggi
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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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.

Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes)

Author : Cheng Few Lee
Publisher : World Scientific
ISBN 13 : 9811202400
Total Pages : 5053 pages
Book Rating : 4.8/5 (112 download)

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Book Synopsis Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes) by : Cheng Few Lee

Download or read book Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes) written by Cheng Few Lee and published by World Scientific. This book was released on 2020-07-30 with total page 5053 pages. Available in PDF, EPUB and Kindle. Book excerpt: This four-volume handbook covers important concepts and tools used in the fields of financial econometrics, mathematics, statistics, and machine learning. Econometric methods have been applied in asset pricing, corporate finance, international finance, options and futures, risk management, and in stress testing for financial institutions. This handbook discusses a variety of econometric methods, including single equation multiple regression, simultaneous equation regression, and panel data analysis, among others. It also covers statistical distributions, such as the binomial and log normal distributions, in light of their applications to portfolio theory and asset management in addition to their use in research regarding options and futures contracts.In both theory and methodology, we need to rely upon mathematics, which includes linear algebra, geometry, differential equations, Stochastic differential equation (Ito calculus), optimization, constrained optimization, and others. These forms of mathematics have been used to derive capital market line, security market line (capital asset pricing model), option pricing model, portfolio analysis, and others.In recent times, an increased importance has been given to computer technology in financial research. Different computer languages and programming techniques are important tools for empirical research in finance. Hence, simulation, machine learning, big data, and financial payments are explored in this handbook.Led by Distinguished Professor Cheng Few Lee from Rutgers University, this multi-volume work integrates theoretical, methodological, and practical issues based on his years of academic and industry experience.