Abstract

http://ssrn.com/abstract=2130145
 
 

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Management Earnings Forecasts and Forward-Looking Statements


Zahn Bozanic


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

Darren T. Roulstone


Ohio State University (OSU) - Fisher College of Business

Andrew Van Buskirk


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

May 21, 2013


Abstract:     
Firms provide a significant amount of forward-looking disclosure to investors. Although quantitative earnings forecasts have been the overwhelming focus of prior research on these disclosures, they represent only a small fraction of forward-looking statements. We use textual analysis to examine managers’ disclosures of forward-looking statements, looking at both earnings-related and non-earnings-related prospective statements. We find that earnings-related forward-looking statements are similar to traditionally-studied (i.e., First Call) earnings forecasts, in terms of both determinants and investor response. However, we show that the vast majority of forward-looking statements do not refer directly to earnings and, more importantly, are significantly different from earnings-related statements. For example, while managers are less likely to issue earnings forecasts and earnings-related forward-looking statements when uncertainty is high, they issue more non-earnings-related forward-looking statements when uncertainty is high. Our results suggest that, contrary to results in prior literature, managers may actually respond to increased investor demand for information by issuing more forward-looking statements, but do so in ways that prior research has overlooked. In short, the well-documented attributes of quantitative earnings forecasts cannot be extended to most forward-looking statements.

Number of Pages in PDF File: 55

Keywords: Earnings Announcements, Voluntary Disclosure, Management Forecasts, Qualitative Disclosures

JEL Classification: D8, M4

working papers series


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Date posted: August 15, 2012 ; Last revised: May 24, 2013

Suggested Citation

Bozanic, Zahn and Roulstone, Darren T. and Van Buskirk, Andrew, Management Earnings Forecasts and Forward-Looking Statements (May 21, 2013). Available at SSRN: http://ssrn.com/abstract=2130145 or http://dx.doi.org/10.2139/ssrn.2130145

Contact Information

Zahn Bozanic
Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )
2100 Neil Avenue
Columbus, OH 43210
United States
Darren T. Roulstone
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

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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