Once Bitten, Twice Shy: The Relation Between Outcomes of Earnings Guidance and Management Guidance Strategy

2008 ◽  
Author(s):  
Mei Feng ◽  
Adam S. Koch
Keyword(s):  
Earnings Guidance ◽  
Management Guidance

The Rewards for Meeting or Beating Managers' Own Earnings Guidance

2020 ◽  
Author(s):  
Kai Wai Hui ◽  
Alfred Z. Liu ◽  
Yao Zhang
Keyword(s):  
Stock Return ◽  
Earnings Forecasts ◽  
Earnings Guidance ◽  
Cross Sectional ◽  
Earnings Expectations ◽  
Future Performance ◽  
Management Guidance ◽  
Prior Literature ◽  
Management Earnings Guidance ◽  
Analyst Earnings

This study documents a stock return premium for meeting or beating management's own earnings guidance (MBMG) that is separate and distinct from the premium for meeting or beating analysts' earnings forecasts (MBAF) documented in prior literature. Cross-sectional analyses reveal that the MBMG premium relative to the MBAF premium increases when management guidance is more informative. We also find that MBMG is incrementally informative about a firm's future performance after considering MBAF. Our findings suggest that investors consider management earnings guidance to be a performance threshold in addition to analyst earnings forecasts when forming earnings expectations.

CEO beauty and management guidance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jun Guo ◽  
Jung Yeun Kim ◽  
Sungsoo Kim ◽  
Nan Zhou
Keyword(s):  
Design Methodology ◽  
Forecast Error ◽  
Facial Appearance ◽  
Management Forecasts ◽  
Regression Analyses ◽  
Earnings Guidance ◽  
Content Type ◽  
Perceived Credibility ◽  
Self Selection ◽  
Management Guidance

PurposeThe authors study whether CEO beauty influences management guidance.Design/methodology/approachThe authors calculate an attractiveness score based on facial symmetry and perform regression analyses to examine the relation between CEO beauty and management guidance.FindingsThe authors find that attractive CEOs are more likely to issue voluntary management earnings guidance. After controlling for this appearance-based self-selection, the authors document that management forecasts provided by attractive CEOs are more optimistic yet less precise. Consistent with this result, the authors find that analysts' consensus forecast error following management forecasts made by attractive CEOs is larger than such error following management forecasts made by unattractive CEOs. The authors further find that the perceived credibility of management forecasts by attractive CEOs is not different from that by unattractive CEOs.Originality/valueThese findings suggest that attractive CEOs are more active but less skillful in issuing management forecasts. This adds to the emerging accounting literature on the relation between facial appearance and information delivery.

(Dis)aggregated earnings forecasts and acquisition financing

2019 ◽  
Vol 28 (2) ◽  
pp. 255-271
Author(s):  
Paul Ordyna
Keyword(s):  
Voluntary Disclosure ◽  
Logistic Model ◽  
Earnings Forecasts ◽  
Merger And Acquisition ◽  
Management Forecasts ◽  
Earnings Guidance ◽  
Content Type ◽  
True Value ◽  
Acquiring Firms ◽  
Management Guidance

Purpose The purpose of this paper is to examine how a firm’s mergers and acquisitions (M&A) goals influence its voluntary disclosure policy. Specifically, this paper examines how a firm’s M&A financing intentions influence the degree of aggregation in management guidance prior to and after the M&A transaction. Design/methodology/approach Using a logistic model, this study tests the relation between M&A financing and the decision to issue disaggregate earnings guidance for 3,929 acquiring firms from 2007 to 2011. Findings The logistic regression results show that firms are more likely to provide disaggregate earnings guidance when using mostly stock to finance M&A and that the incentives to disaggregate guidance vary throughout the M&A transactional window. Alternatively, because the value of cash is independent of the true value of the acquirer, the results show that firms offering mostly cash to finance M&A are less likely to issue disaggregate earnings forecasts. Additional analysis reveals that the decision to issue disaggregate earnings guidance also influences post-merger outcomes such as CEO turnover. Research limitations/implications The choice to disaggregate earnings guidance and the choice to use stock as a means to finance an acquisition is made by management, thus are endogenous which could introduce bias. Originality/value This study provides insights into management’s incentives and attitudes toward the use of management forecasts to effect a potential merger and acquisition. Given the flexibility management has in issuing voluntary forecasts, management can tailor a financial message toward investors and potential targets in attempt to facilitate a merger and acquisition and to further the firm’s goals.

Does the Form of Management's Earnings Guidance Affect Analysts' Earnings Forecasts? (Retracted)

2006 ◽  
Vol 81 (1) ◽  
pp. 207-225 ◽  
Author(s):  
Robert Libby ◽  
Hun-Tong Tan ◽  
James E. Hunton
Keyword(s):  
Narrow Range ◽  
Earnings Forecasts ◽  
Point Estimate ◽  
Earnings Guidance ◽  
Earnings Announcement ◽  
Wide Range ◽  
Information Precision ◽  
Management Guidance ◽  
Psychology Literature ◽  
Relationship Of

This study examines how the form of management's earnings guidance (point, narrow range, wide range) affects analysts' earnings forecasts. Results from two experiments demonstrate that: (1) guidance form has no effect on analysts' forecasts made immediately after the guidance; and (2) after the actual earnings announcement, guidance form and the relationship of the earnings guidance to actual earnings (guidance error) interact in their effect on analysts' forecasts. After the actual earnings announcement, guidance error leads to higher (lower) analysts' forecasts for firms with downwardly (upwardly) biased guidance; this effect of guidance error is magnified by a narrow range and reduced by a wide range, compared to a point estimate. These results suggest that treating the mean of the range endpoints as equivalent to a point estimate and failing to consider effects after the release of actual earnings may paint an incomplete picture of how management guidance affects analysts and investors. It also offers useful information to managers who issue earnings guidance, and presents a challenge to the psychology literature regarding the effects of information precision on judgment and decision making.

Once Bitten, Twice Shy: The Relation between Outcomes of Earnings Guidance and Management Guidance Strategy

2010 ◽  
Vol 85 (6) ◽  
pp. 1951-1984 ◽  
Author(s):  
Mei Feng ◽  
Adam S. Koch
Keyword(s):  
Information Asymmetry ◽  
Management Forecasts ◽  
Earnings Guidance ◽  
Quarterly Earnings ◽  
Management Guidance

ABSTRACT: We examine how management quarterly guidance strategy is affected by various outcomes from previously issued guidance. We find that managers are less likely to provide quarterly earnings guidance for a given year when past management forecasts have been overly optimistic, when past forecasts were unsuccessful at influencing analysts’ expectations, when past forecasts failed to reduce information asymmetry, and when past forecasts resulted in earnings disappointments. For firms that continue to give guidance, adverse prior outcomes also affect the precision of future guidance and the number of quarters within a year for which they give guidance.

Earnings Guidance after Regulation FD

CFA Digest ◽  
2004 ◽  
Vol 34 (2) ◽  
pp. 3-5
Author(s):  
Lorne Jeremy Zeiler
Keyword(s):  
Earnings Guidance ◽  
Regulation Fd
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