Abstract

http://ssrn.com/abstract=1021949
 
 

References (71)



 
 

Citations (10)



 


 



The Market Reward for Achieving Analyst Earnings Expectations: Does Managing Expectations or Earnings Matter?


Vasiliki E. Athanasakou


London School of Economics & Political Science (LSE) - Department of Accounting

Norman C. Strong


University of Manchester - Manchester Business School

Martin Walker


University of Manchester - Manchester Business School

October 1, 2010

Journal of Business Finance and Accounting, 2011 Vol. 38 (1/2), 58-94.

Abstract:     
This study explores the market response to achieving analyst earnings expectations, distinguishing between expectations achieved through earnings forecast guidance and earnings management. We consider three earnings management tools: real earnings management, working capital accruals management, and classification shifting. Analysis indicates that UK firms use earnings forecast guidance and classification shifting to achieve analyst expectations. The market does not reward firms that achieve expectations through forecast guidance, and achievers that classification shift receive a lower market reward than genuine achievers. The market response aligns with information on future profitability and rational pricing tests show that there is no overall mispricing of achievers. Evidence of stock price incentives to engage in earnings forecast guidance is found only within more opportunistic downward forecast revisions mainly driven by high market growth expectations.

Number of Pages in PDF File: 51

Keywords: analyst expectations, market reward, earnings management, classification shifting, earnings forecast guidance, opportunistic, informative

JEL Classification: M41, M43, M47, G12, G29

Accepted Paper Series


Download This Paper

Date posted: October 16, 2007 ; Last revised: November 21, 2013

Suggested Citation

Athanasakou, Vasiliki E. and Strong, Norman C. and Walker, Martin, The Market Reward for Achieving Analyst Earnings Expectations: Does Managing Expectations or Earnings Matter? (October 1, 2010). Journal of Business Finance and Accounting, 2011 Vol. 38 (1/2), 58-94.. Available at SSRN: http://ssrn.com/abstract=1021949

Contact Information

Vasiliki E. Athanasakou (Contact Author)
London School of Economics & Political Science (LSE) - Department of Accounting ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
Norman Charles Strong
University of Manchester - Manchester Business School ( email )
Booth Street West
Manchester, M15 6PB
United Kingdom
HOME PAGE: http://www.personal.mbs.ac.uk/nstrong/
Martin Walker
University of Manchester - Manchester Business School ( email )
Booth Street West
Manchester, M15 6PB
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 2,006
Downloads: 570
Download Rank: 25,499
References:  71
Citations:  10

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 1.140 seconds