Abstract

http://ssrn.com/abstract=1014065
 
 

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Manager-Specific Effects on Earnings Guidance: An Analysis of Top Executive Turnovers


Francois Brochet


Boston University - Department of Accounting

Lucile Faurel


University of California, Irvine

Sarah E. McVay


University of Washington

June 2, 2011

Journal of Accounting Research, Vol. 49, No. 5, December 2011

Abstract:     
We investigate how managers contribute to the provision of earnings guidance by examining the association between top executive turnovers and guidance. Although firm and industry characteristics are important determinants of guidance, we conclude that CEOs participate in firm-level policy decisions, whereas CFOs are involved in the formation or discussion of guidance. Among firms that historically issued frequent guidance, breaks in guidance following CEO turnovers are relatively permanent and are potentially attributable to firm-initiated changes in guidance policy. Breaks following CFO turnovers, however, likely reflect uncertainty on the part of the newly appointed executive - they are concentrated in the two quarters following the turnover, are associated with the background of the newly appointed CFO, and extend to the relative precision of the guidance. Among firms that did not issue guidance historically, we find some evidence that newly appointed externally hired CEOs increase the likelihood of providing guidance.

Number of Pages in PDF File: 51

Keywords: Earnings guidance, Management guidance, Managerial expertise, Managerial knowledge, Executive turnover, CEO turnover, CFO turnover

JEL Classification: M41

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Date posted: September 12, 2007 ; Last revised: May 7, 2013

Suggested Citation

Brochet, Francois and Faurel, Lucile and McVay, Sarah E., Manager-Specific Effects on Earnings Guidance: An Analysis of Top Executive Turnovers (June 2, 2011). Journal of Accounting Research, Vol. 49, No. 5, December 2011. Available at SSRN: http://ssrn.com/abstract=1014065

Contact Information

Francois Brochet (Contact Author)
Boston University - Department of Accounting ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
Lucile Faurel
University of California, Irvine ( email )
The Paul Merage School of Business
SB 442
Irvine, CA California 92697
United States
1-949-824-0020 (Phone)
Sarah E. McVay
University of Washington ( email )
Box 353200
Seattle, WA 98195-3200
United States
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