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| Author | : Yoel Beniluz |
| Publisher | : |
| Total Pages | : 55 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Management Earnings Forecasts and Simultaneous Release of Earnings News Book in PDF, ePub and Kindle
This paper examines the hypothesis that when disappointing information regarding a firm's performance is released, the firm's management faces particularly strong incentives to counter the disappointing news with overly optimistic forward-looking statements. To address this issue, the paper investigates the properties of management earnings forecasts released simultaneously with earnings announcements. The paper predicts and finds that the more disappointing the earnings announcement news, the higher the optimistic bias in the simultaneously released management long-horizon forecasts of annual earnings. Since managers may use short-horizon forecasts of quarterly earnings to avoid disappointing earnings announcements, the paper also examines the interplay between management short-horizon forecasts of quarterly earnings and long-horizon forecasts of annual earnings that are released simultaneously. The paper documents a significantly negative association between the news contained in the short-horizon forecasts of quarterly earnings and the optimistic bias in the accompanying long-horizon forecast of annual earnings. The paper also investigates the link between management's decision to issue earnings guidance and the contemporaneous earnings announcement news, finding that, in general, more extreme earnings announcement news results in more earnings guidance. Finally, using market reaction tests, the paper documents that market participants are aware, at least to some extent, of management's tendency to counter disappointing earnings news with overly optimistic forecasts.
| Author | : Hwa Deuk Yi |
| Publisher | : |
| Total Pages | : 236 |
| Release | : 1994 |
| Genre | : Corporate profits |
| ISBN | : |
Download Management Earnings Forecasts Book in PDF, ePub and Kindle
| Author | : Haidan Li |
| Publisher | : |
| Total Pages | : 46 |
| Release | : 2009 |
| Genre | : |
| ISBN | : |
Download Can Supplementary Disclosures Eliminate Post-Earnings-Announcement Drift? The Case of Management Earnings Guidance Book in PDF, ePub and Kindle
We investigate whether earnings guidance can reduce or eliminate post-earnings-announcement drift. We find that firms that provide earnings guidance simultaneously with their earnings announcements experience significantly less drift than other firms, consistent with our expectations. Furthermore, the reduction in drift is strongly related to current and prior guidance accuracy. Drift is eliminated for firms that provide accurate prior (or current) guidance, but is significant for low-guidance-accuracy firms. Finally, we find post-guidance-announcement drift for stand-alone earnings guidance, but not for guidance that is provided simultaneously with earnings. Our results suggest that simultaneous earnings and guidance announcements enhance analysts' and investors' ability to extract useful information about future earnings from both earnings and guidance announcements. More importantly, our results indicate that investors can use past guidance accuracy to identify firms whose post-earnings-announcement drift is unaffected, or eliminated, by the issuance of management earnings guidance.
| Author | : Stephen P. Baginski |
| Publisher | : |
| Total Pages | : 56 |
| Release | : 2020 |
| Genre | : |
| ISBN | : |
Download Do Managers Bias Their Forecasts of Future Earnings in Response to Their Firm's Current Earnings Announcement Surprises? Book in PDF, ePub and Kindle
Approximately 90 percent of managers' earnings forecasts are issued simultaneously with their firm's current earnings announcement - a practice referred to as the “bundling” of earnings information. We examine whether managers bias these forecasts conditional on the news conveyed in current earnings, and offer three findings. First, managers appear to release optimistically biased earnings forecasts with simultaneously released negative current earnings news. Second, managers appear to release pessimistically biased earnings forecasts with simultaneously released large positive current earnings news. Third, these results (especially for optimistic bias when current earnings news is negative) are stronger when managers: (1) face less analyst monitoring and lower litigation risk, which constrain the ability to bias their forecasts, and (2) face greater career concerns, which create incentives to alter investor perceptions about current earnings. Additional analysis suggests that investors are unable to identify the management forecast bias, but that they unravel the bias subsequently as it is revealed. While no archival study can ascertain management intent, we provide several results that cast doubt on the idea that this management forecast bias behavior is purely unintentional. Overall, our evidence suggests that managers issue biased forecasts with the earnings announcement to influence perceptions of their firm's current earnings news.
| Author | : Yongtae Kim |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Management Earnings Forecasts and Value of Analyst Forecast Revisions Book in PDF, ePub and Kindle
This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies' finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.
| Author | : Shana Clor-Proell |
| Publisher | : |
| Total Pages | : 35 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download How Disaggregated Forecasts Influence Investor Response to Subsequent Earnings Announcements Book in PDF, ePub and Kindle
Firms often issue disaggregated earnings forecasts, and prior research reveals benefits to doing so. However, we hypothesize and experimentally find that the benefits of disaggregated forecasts do not necessarily carry over to the time of actual earnings announcements. Rather, disaggregated forecasts create multiple points of possible comparison between the forecast and the subsequent earnings announcement. Thus, when firms disaggregate forecasts and subsequently release disaggregated actual earnings numbers, investors reward firms that beat those multiple benchmarks, but punish firms that miss those multiple benchmarks. Thus, we show that issuing a disaggregated earnings forecast to achieve the associated benefits can backfire after the announcement of actual earnings. Our results have implications for researchers and firm managers.
| Author | : Chao-Shin Liu |
| Publisher | : |
| Total Pages | : 232 |
| Release | : 1992 |
| Genre | : Business forecasting |
| ISBN | : |
Download Management Earnings Forecasts, Security Price Variability, and the Marginal Information Content of Earnings Announcements Book in PDF, ePub and Kindle
The purpose of this study is to determine (1) whether management forecasts decrease the marginal information content of subsequent earnings announcements and (2) whether the market efficiently reflects the information contained in the management forecast. If management forecasts and subsequent earnings announcements convey similar information, the subsequent earnings announcement is expected to be less informative than the prior management forecast. Moreover, the earnings announcement preceded by a management forecast is also expected to be less informative than the earnings announcement without a previous management forecast. Evidence consistent with these predictions is found using price variability to measure the degree of information content. This study also employs a system of equations model and demonstrates that the subsequent earnings announcements convey additional information to the market, with the additional information mainly associated with the ex-post management forecast error. In addition, abnormal returns around management forecasts and those around subsequent earnings announcements are negatively correlated. This evidence suggests that the market may overreact to management earnings forecasts. The post-announcement drift phenomenon is also found in the context of management quarterly earnings forecasts.
| Author | : Kenneth J. Merkley |
| Publisher | : |
| Total Pages | : 48 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Detailed Management Earnings Forecasts Book in PDF, ePub and Kindle
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.
| Author | : Matthew Driskill |
| Publisher | : |
| Total Pages | : 50 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download Concurrent Earnings Announcements and Analysts' Information Production Book in PDF, ePub and Kindle
We examine whether financial analysts--sophisticated market participants--are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to issue timely earnings forecasts for the sample firm's subsequent quarter than analysts without a concurrent announcement. The likelihood of timely forecasts decreases monotonically and significantly as an analyst's number of concurrent announcements increases. Among the analysts who are able to issue timely earnings forecasts, the thoroughness of their work (measured by the number of forecasts for longer-horizon earnings and earnings components that accompany the earnings forecast) decreases monotonically and significantly as their number of concurrent announcements increases. In addition, analysts are more sluggish in providing stock recommendations and less likely to ask questions in earnings conference calls as their number of concurrent announcements increases. Moreover, we find that when analysts face concurrent announcements, they tend to allocate their limited attention to firms that already have rich information environments, leaving behind firms in need of attention. We also find some evidence of slower price discovery when a larger percentage of a firm's analysts have concurrent announcements.
| Author | : Sanjeev Bhojraj |
| Publisher | : |
| Total Pages | : 200 |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
Download Management Earnings Forecasts Book in PDF, ePub and Kindle
