How Patterns of Past Guidance Provision Affect Investor Judgments: The Joint Effect of Guidance Frequency and Guidance Pattern Consistency

2017 ◽  
Vol 93 (3) ◽  
pp. 327-348 ◽  
Author(s):  
Michael Tang ◽  
Shankar Venkataraman
Keyword(s):  
Empirical Research ◽  
Voluntary Disclosure ◽  
Joint Effect ◽  
Two Dimensions ◽  
Data Availability ◽  
Earnings Guidance ◽  
Managerial Opportunism ◽  
Investor Judgments ◽  
Historical Pattern ◽  
Shed Light

ABSTRACT Theory suggests that the provision of voluntary disclosure, in itself, is informative to investors, but prior empirical research largely focuses on investors' reaction to the content of disclosure. We extend the literature on earnings guidance by experimentally examining how investors react to a firm's historical pattern of guidance provision, holding constant guidance content. We manipulate two dimensions of guidance provision—how often guidance is provided (frequency), and whether guidance is provided for the same quarter(s) across consecutive years (pattern consistency). We find that consistency positively impacts investors' confidence and likelihood of investing because investors associate consistency with lesser managerial opportunism, but consistency matters only when frequency is low. Our results shed light on an important dimension of guidance provision unexamined in prior research—guidance consistency—and highlight when it can influence investor judgments even when key elements of a firm's historical guidance content are held constant. Data Availability: Contact the authors.

The Effect of Competition Intensity and Competition Type on the Use of Customer Satisfaction Measures in Executive Annual Bonus Contracts

2014 ◽  
Vol 90 (1) ◽  
pp. 229-263 ◽  
Author(s):  
Clara Xiaoling Chen ◽  
Ella Mae Matsumura ◽  
Jae Yong Shin ◽  
Steve Yu-Ching Wu
Keyword(s):  
Customer Satisfaction ◽  
Interactive Effect ◽  
Joint Effect ◽  
Performance Measure ◽  
Two Dimensions ◽  
Data Availability ◽  
Competition Intensity ◽  
Nonfinancial Performance ◽  
Alternative Measures ◽  
Satisfaction Measures

ABSTRACT This paper empirically examines the interactive effect of competition intensity and competition type on the use of customer satisfaction measures in executives' annual bonus contracts. Specifically, we predict a stronger association between competition intensity in an industry and the use of customer satisfaction measures in executives' annual bonus contracts when the competition is non-price-based than when the competition is price-based. Using hand-collected data from Standard & Poor's (S&P) 1500 firms' disclosures of the use of customer satisfaction measures in executive bonus contracts in 2006 and 2010 proxy statements, we find results consistent with our prediction. Our results are robust to alternative measures of competition type and competition intensity. We also find similar results when we use the weight on customer satisfaction measures in executive bonus contracts as the dependent variable. Our study extends the literature on the effect of competition on the design of managerial incentives by distinguishing between competition intensity and competition type, and providing the first large-sample empirical evidence on the joint effect of these two dimensions of competition on the incentive use of an important nonfinancial performance measure. Data Availability: Data used in this study are obtained from publicly available sources.

scholarly journals Information Externalities and Voluntary Disclosure: Evidence from a Major Customer's Earnings Announcement

2020 ◽  
Vol 95 (6) ◽  
pp. 73-96
Author(s):  
Young Jun Cho ◽  
Yongtae Kim ◽  
Yoonseok Zang
Keyword(s):  
Supply Chain ◽  
Voluntary Disclosure ◽  
Data Availability ◽  
Earnings Guidance ◽  
Future Prospects ◽  
Earnings Announcement ◽  
Supply Chain Relationships ◽  
Information Transfers ◽  
Positive Effect

ABSTRACT We examine the relation between information externalities along the supply chain and voluntary disclosure. Information transfers from a major customer's earnings announcement (EA) can substitute for its supplier's disclosure. Conversely, if the customer's EA increases uncertainties regarding the supplier's future prospects, it can increase the demand for disclosure. After controlling for information incorporated in supplier returns, we find that the supplier is more likely to issue earnings guidance after the customer's EA when the EA news deviates more from the market's expectation. The positive effect of the customer's news on earnings guidance is weaker when common investors, supply-chain analysts, or a common industry allow investors to better understand the value implications of the news, while the effect increases with the importance of the customer to the supplier. The effect is also stronger when EA news is negative rather than positive. Collectively, the results suggest that supply-chain relationships influence voluntary disclosure. Data Availability: All data are publicly available from sources indicated in the text.

Characteristics and Implications of Long-Term Earnings Guidance

2020 ◽  
Vol 6 (1) ◽  
pp. 33-54
Author(s):  
Andrew C. Call ◽  
Adam M. Esplin ◽  
Bin Miao
Keyword(s):  
Voluntary Disclosure ◽  
Earnings Forecasts ◽  
Data Availability ◽  
Real Earnings Management ◽  
Limited Attention ◽  
Earnings Guidance ◽  
Short Term ◽  
Operating Environments ◽  
Growth Forecasts

ABSTRACT We examine a form of voluntary disclosure that has received limited attention to date, namely, managers' long-term guidance for earnings three to five years in advance. We identify 1,739 long-term earnings forecasts issued by 295 unique firms from 2000 to 2012 and find that relative to firms that issue only short-term earnings guidance, those that also issue long-term guidance are larger, have more certain operating environments, and are followed by analysts who are more likely to issue long-term growth forecasts. Long-term guidance is informative to investors and analysts incorporate the news contained in these forecasts into their own long-term growth forecasts. We also document that the issuance of long-term guidance is associated with more (less) investor focus on long-term (short-term) earnings news. Last, we find mixed evidence on the association between long-term guidance and real earnings management decisions. Our study adds to the literature on managers' voluntary disclosure choices. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G17; M41.

Do Managers Disclose or Withhold Bad News? Evidence from Short Interest

2018 ◽  
Vol 94 (3) ◽  
pp. 1-26 ◽  
Author(s):  
Dichu Bao ◽  
Yongtae Kim ◽  
G. Mujtaba Mian ◽  
Lixin (Nancy) Su
Keyword(s):  
Private Information ◽  
Voluntary Disclosure ◽  
Stock Price ◽  
Data Availability ◽  
Bad News ◽  
General Tendency ◽  
Litigation Risk ◽  
Novel Approach ◽  
Conflicting Evidence ◽  
Short Interest

ABSTRACT Prior studies provide conflicting evidence as to whether managers have a general tendency to disclose or withhold bad news. A key challenge for this literature is that researchers cannot observe the negative private information that managers possess. We tackle this challenge by constructing a proxy for managers' private bad news (residual short interest) and then perform a series of tests to validate this proxy. Using management earnings guidance and 8-K filings as measures of voluntary disclosure, we find a negative relation between bad-news disclosure and residual short interest, suggesting that managers withhold bad news in general. This tendency is tempered when firms are exposed to higher litigation risk, and it is strengthened when managers have greater incentives to support the stock price. Based on a novel approach to identifying the presence of bad news, our study adds to the debate on whether managers tend to withhold or release bad news. Data Availability: Data used in this study are available from public sources identified in the study.

Joint Impact of Materiality Guidance and Justification Requirement on Auditors' Planning Materiality

2015 ◽  
Vol 28 (2) ◽  
pp. 17-27 ◽  
Author(s):  
Juthathip Audsabumrungrat ◽  
Sompong Pornupatham ◽  
Hun-Tong Tan
Keyword(s):  
Current Literature ◽  
Detrimental Effect ◽  
Joint Effect ◽  
Data Availability

ABSTRACT In this study, we examine a setting in which overreliance on structured materiality guidance leads to less appropriate materiality assessments by auditors, and investigate whether a justification requirement in the absence of accountability mitigates this effect. Results from our experiment show that audit managers make less conservative and less appropriate planning materiality assessments in the presence of structured materiality guidance, but that this detrimental effect is mitigated by the need to justify their judgments. Our study on the joint effect of these two features extends current literature on materiality judgments and has implications for audit practice. Data Availability: Contact the authors.

Does Wrongdoer Reputation Matter? Impact of Auditor-Wrongdoer Performance and Likeability Reputations on Fellow Auditors' Intention to Take Action and Choice of Reporting Outlet

2011 ◽  
Vol 23 (2) ◽  
pp. 207-234 ◽  
Author(s):  
Jesse C. Robertson ◽  
Chad M. Stefaniak ◽  
Mary B. Curtis
Keyword(s):  
Two Dimensions ◽  
Data Availability ◽  
Good Performer ◽  
Reporting Decisions ◽  
Prior Literature ◽  
Reporting Channel ◽  
Channel Preferences ◽  
Main Effects ◽  
The Impact ◽  
Selection Of

ABSTRACT We investigate the effects of auditor-wrongdoer reputations for performance and likeability on fellow auditors' intentions to take action in response to a questionable audit act. We also use this context to explore auditor selection of reporting outlets, when they do choose to take action. In an experiment with 181 auditors, main effects suggest that likeability reputation is a significant determinant of intention to take action, while performance reputation is marginally significant. As expected, interaction results indicate that auditors have the greatest intention to take action against less likeable, poor performers. Contrary to expectations, intention to take action against a more likeable, good performer is no lower than the mixed conditions. Thus, the influence of the two dimensions of reputation is complex. Additionally, we find auditors are more likely to whistle-blow internally than externally, and through non-anonymous outlets than anonymous outlets. Our contributions include exploring the impact of reputation on the actions of third parties, and advancing prior literature by considering the influence of wrongdoer attributes on reporting decisions and auditors' reporting channel preferences. Data Availability: Data are available from the first author upon request.

Deposit Supply and Bank Transparency

2021 ◽  
Author(s):  
Liangliang Jiang ◽  
Ross Levine ◽  
Chen Lin ◽  
Wensi Xie
Keyword(s):  
Voluntary Disclosure ◽  
Information Disclosure ◽  
Cost Benefit ◽  
Technological Innovations ◽  
External Funding ◽  
Earnings Guidance ◽  
Funding Sources ◽  
Bank Deposits ◽  
Bank Managers ◽  
The Cost

Does a bank’s dependence on different external funding sources shape its voluntary disclosure of information? We evaluate whether economic shocks that increase the supply of bank deposits alter the cost–benefit calculations of bank managers concerning voluntary information disclosure. We measure information disclosure using 10-K filings, 8-K filings, and earnings guidance. As for the funding shock, we use unanticipated technological innovations that triggered shale development and booms in bank deposits. Further analyses suggest that greater exposure to shale development reduced information disclosure by relaxing the incentives for managers to disclose information to attract funds from external capital markets. This paper was accepted by Kay Giesecke, finance.

Impact of Industry-Academia Collaboration on Student Satisfaction in Vocational Education and Training

2021 ◽  
Vol 12 (2) ◽  
pp. 47-62
Author(s):  
Garimidi Siva Sree ◽  
P. Ramlal
Keyword(s):  
Vocational Education ◽  
Student Satisfaction ◽  
Empirical Research ◽  
Vocational Education And Training ◽  
Skill Transfer ◽  
Job Market ◽  
Industrial Training ◽  
Course Quality ◽  
And Training ◽  
Shed Light

The contemporary unstable job market is challenging the “traditional” skilling practices adopted by vocational education training (VET) institutions, in favor of demand-driven skill transfer which is characterized by preparing students industry-ready. In this light, student satisfaction plays a pivotal role in assessing the course quality that aids in efficient skill transfer. Despite the relevance of the student satisfaction concept, empirical research has provided little evidence on its predictors in VET. The purpose of the study is to shed light on the quality indicators that predict student satisfaction. Data were collected on students from industrial training institutes (ITIs) of India.

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