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 data set 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 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.
Translated title of the contribution | Expectations management and beatable targets: How do analysts react to explicit earnings guidance? |
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Original language | German |
Pages (from-to) | 593-624 |
Number of pages | 32 |
Journal | Contemporary Accounting Research |
Volume | 23 |
Issue number | 3 |
DOIs | |
State | Published - Sep 2006 |
Keywords
- Analysts
- Earnings guidance
- Expectations management
- Management earnings forecasts
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics