Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Ex Post Realization And Valuation Of Management Earnings Forecasts Managers Discretion And Characteristics Of Forecasting Firms PDF full book. Access full book title Ex Post Realization And Valuation Of Management Earnings Forecasts Managers Discretion And Characteristics Of Forecasting Firms.
| Author | : Sungyu Sohn |
| Publisher | : |
| Total Pages | : |
| Release | : 1992 |
| Genre | : |
| ISBN | : |
| Author | : Norio Kitagawa |
| Publisher | : |
| Total Pages | : 64 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
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.
| Author | : Afshad J. Irani |
| Publisher | : |
| Total Pages | : 40 |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
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.
| Author | : |
| Publisher | : |
| Total Pages | : 620 |
| Release | : 1999 |
| Genre | : Dissertations, Academic |
| ISBN | : |
| Author | : Hwa Deuk Yi |
| Publisher | : |
| Total Pages | : 236 |
| Release | : 1994 |
| Genre | : Corporate profits |
| ISBN | : |
| Author | : |
| Publisher | : |
| Total Pages | : 724 |
| Release | : 1991 |
| Genre | : Dissertation abstracts |
| ISBN | : |
| Author | : Richard A. Cazier |
| Publisher | : |
| Total Pages | : 47 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
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.
| Author | : Patricia C. O'Brien |
| Publisher | : Forgotten Books |
| Total Pages | : 74 |
| Release | : 2018-02-26 |
| Genre | : Mathematics |
| ISBN | : 9780666405524 |
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.
| Author | : D. Eric Hirst |
| Publisher | : |
| Total Pages | : 50 |
| Release | : 2008 |
| Genre | : |
| ISBN | : |
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.
| Author | : Kazuo Kato |
| Publisher | : |
| Total Pages | : 30 |
| Release | : 2005 |
| Genre | : |
| ISBN | : |
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.
