Abstract

http://ssrn.com/abstract=1126405
 
 

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Earnings Guidance and Market Uncertainty


Jonathan L. Rogers


University of Chicago - Booth School of Business

Douglas J. Skinner


The University of Chicago - Booth School of Business

Andrew Van Buskirk


Ohio State University (OSU) - Department of Accounting & Management Information Systems

August 17, 2009

Chicago Booth Research Paper No. 09-17
Journal of Accounting & Economics (JAE), Vol. 48, No. 1, pp.90-109, 2009

Abstract:     
We study the effect of disclosure on uncertainty by examining how management earnings forecasts affect stock market volatility. Using implied volatilities from exchange-traded options prices, we find that management earnings forecasts, on average, increase short-term volatility. This effect is attributable to forecasts that convey bad news, especially when firms release forecasts sporadically (as opposed to on a routine basis). In the longer run, market uncertainty declines after earnings are announced regardless of whether there is a preceding earnings forecast. This decline is mitigated when the firm issues a forecast that conveys negative news.

Number of Pages in PDF File: 54

JEL Classification: D8, G14, M4

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Date posted: April 28, 2008 ; Last revised: September 14, 2011

Suggested Citation

Rogers, Jonathan L. and Skinner, Douglas J. and Van Buskirk, Andrew, Earnings Guidance and Market Uncertainty (August 17, 2009). Chicago Booth Research Paper No. 09-17; Journal of Accounting & Economics (JAE), Vol. 48, No. 1, pp.90-109, 2009. Available at SSRN: http://ssrn.com/abstract=1126405

Contact Information

Jonathan L. Rogers
University of Chicago - Booth School of Business ( email )
5807 S Woodlawn
Chicago, IL 60637-1561
United States
773-834-0161 (Phone)
Douglas J. Skinner
The University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

Chicago Booth School of Business Logo

Andrew Van Buskirk (Contact Author)
Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )
2100 Neil Avenue
Columbus, OH 43210
United States
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