Earnings Volatility and Voluntary Management Forecast Disclosure

1985 ◽  
Vol 23 (1) ◽  
pp. 268 ◽  
Author(s):  
Gregory Waymire
Keyword(s):  
Earnings Volatility ◽  
Management Forecast

Assessing the Accuracy of Forward-Looking Information in Debt Contract Negotiations: Management Forecast Accuracy and Private Loans

2020 ◽  
Vol 32 (1) ◽  
pp. 79-102
Author(s):  
Peter R. Demerjian ◽  
John B. Donovan ◽  
Jared Jennings
Keyword(s):  
Forecast Accuracy ◽  
Debt Contracts ◽  
Earnings Volatility ◽  
Contract Negotiations ◽  
External Auditors ◽  
Future Performance ◽  
Management Forecast ◽  
Debt Contract ◽  
Future Value ◽  
Forward Looking

ABSTRACT We examine a possible mechanism by which the lender can evaluate the borrower's ability to produce accurate forward-looking information. Forward-looking information is important to lenders to project the borrower's future performance and the loan's expected payoff. However, unlike historical financial statements, forward-looking information cannot be verified by lenders or external auditors. We contend that the borrower's past forecast accuracy provides a measure that allows the lender to assess the borrower's ability to produce accurate forward-looking information, allowing the lender to gain greater confidence in the borrower's projections of future value. Consistent with this argument, we find that the borrower's past forecast accuracy is negatively associated with the loan's initial interest spread. We also find that this relation is concentrated among non-relationship loans and borrowers with greater earnings volatility. Finally, we find that debt contracts to borrowers with more accurate managerial forecasts exhibit less interest rate mispricing. JEL Classifications: G30; M40; M41.

Earnings Management, Forecast Guidance and the Banking Crisis

2011 ◽  
Author(s):  
Elena Beccalli ◽  
Saverio Bozzolan ◽  
Andrea Menini ◽  
Philip Molyneux
Keyword(s):  
Earnings Management ◽  
Banking Crisis ◽  
Management Forecast ◽  
Forecast Guidance

Information Technology Capability, Management Forecast Accuracy, and Analyst Forecast Revisions

2018 ◽  
Vol 32 (3) ◽  
pp. 49-70 ◽  
Author(s):  
Feiqi Huang ◽  
He Li ◽  
Tawei Wang
Keyword(s):  
Forecast Accuracy ◽  
Analyst Forecast ◽  
Management Forecasts ◽  
Forecast Revisions ◽  
It Capability ◽  
Management Forecast ◽  
Prior Literature ◽  
Technology Capability ◽  
Information Technology Capability ◽  
The Relationship

SYNOPSISPrior literature has firmly established the relationship between IT capability and firm performance. In this paper, we extend the research in this field and investigate (1) whether IT capability contributes to management forecast accuracy, and (2) whether IT capability improves the informativeness of management forecasts and enhances the extent to which analysts incorporate management forecasts in their revisions. Using firms listed on InformationWeek 500 as our high IT capability group, we empirically demonstrate that firms with high IT capability are able to increase management forecast accuracy, and that analysts incorporate more information from management forecasts in their revisions if the firm has high IT capability.

Determinants and Consequences of Firms' Derivative Accounting Decisions

2020 ◽  
Vol 5 (1) ◽  
pp. 81-114 ◽  
Author(s):  
Spencer Pierce
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Firm Risk ◽  
Accounting Firms ◽  
Earnings Volatility ◽  
Hedge Accounting ◽  
Reported Earnings ◽  
Jel Classifications

ABSTRACTFinancial accounting standards require derivatives to be recognized at fair value with changes in value recognized immediately in earnings. However, if specified criteria are met, firms may use an alternative accounting treatment, hedge accounting, which is intended to better represent the underlying economics of firms' derivative use. Using FAS 161 disclosures, I examine determinants of hedge accounting use and the effects of hedge accounting on financial reporting and capital markets. I find variation in firms' hedge accounting use and provide evidence that compliance costs of applying hedge accounting affect firms' decision to use hedge accounting. Firms decrease their reported earnings volatility via derivatives that receive hedge accounting and could further decrease their earnings volatility if hedge accounting were applied to all their derivatives. Inconsistent with arguments given for using hedge accounting, I fail to find a decrease in investors' assessments of firm risk from using hedge accounting.JEL Classifications: M40; M41; G32.

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