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The Role of Supplementary Statements with Management Earnings ForecastsAmy P. HuttonBoston College - Carroll School of Management Gregory S. MillerUniversity of Michigan - Ross School of Business Douglas J. SkinnerThe University of Chicago - Booth School of Business February 2003 Tuck School of Business Working Paper No. 03-03 Abstract: We investigate managers' decisions to supplement their firms' management earnings forecasts. We classify these supplementary disclosures as either qualitative "soft talk" disclosures or verifiable forward-looking statements. We find that managers provide "soft talk" disclosures with similar frequency for good and bad news forecasts, but are more likely to supplement good news forecasts with verifiable forward-looking statements. We examine the market response to these forecasts and find that bad news earnings forecasts are always informative but that good news forecasts are informative only when supplemented by verifiable forward-looking statements, suggesting that these statements bolster the credibility of good news forecasts.
Number of Pages in PDF File: 42 JEL Classification: M41, M43, M45 working papers seriesDate posted: September 29, 2000Suggested CitationContact Information
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