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What Do Management Earnings Forecasts Convey About the Macroeconomy?Samuel B. Bonsall IVOhio State University (OSU) - Department of Accounting & Management Information Systems Zahn BozanicOhio State University (OSU) - Department of Accounting & Management Information Systems Paul E. FischerUniversity of Pennsylvania - The Wharton School January 15, 2013 Journal of Accounting Research, Forthcoming Abstract: We decompose quantitative management earnings forecasts into macroeconomic and firm-specific components to determine the extent to which voluntary disclosure provided by management has macroeconomic information content. We provide evidence that the forecasts of bellwether firms, which are defined as firms in which macroeconomic news explains the greatest amount of variation in the forecasts, provide timely information to the market about the macroeconomy when bundled with earnings announcements. Further, we show that bellwether firms provide timely information about both industry-specific events and broader economic events. Finally, we document that the macroeconomic news in individual forecasts is more pronounced for bad news and point forecasts.
Number of Pages in PDF File: 53 Keywords: Voluntary disclosure, management earnings forecasts, bellwether firms, macroeconomic risk JEL Classification: E44, G14, M41 Accepted Paper SeriesDate posted: January 8, 2012 ; Last revised: January 16, 2013Suggested CitationContact Information
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