Abstract

http://ssrn.com/abstract=820644
 
 

References (36)



 
 

Citations (43)



 


 



Is Silence Golden? An Empirical Analysis of Firms that Stop Giving Quarterly Earnings Guidance


Shuping Chen


University of Texas at Austin - Red McCombs School of Business

Dawn A. Matsumoto


University of Washington - Department of Accounting

Shivaram Rajgopal


Emory University - Goizueta Business School

October 2006


Abstract:     
We investigate a sample of 96 firms that publicly renounced quarterly EPS guidance in the post-FD period (10/2000 to 1/2006). We find that stoppers have poor trailing stock return performance and lower institutional ownership. We document an average -4.8% three-day return around the announcement to stop guidance and this reaction is associated with poor future performance. After the elimination of guidance, stock prices lead earnings less but there is no change in overall stock return volatility or analyst following. However, analyst forecast dispersion increases and forecast accuracy decreases following firms' decision to stop guiding, despite increased disclosures made in earnings press releases.

Number of Pages in PDF File: 57

Keywords: Earnings guidance, stop guidance, cost of capital

JEL Classification: A10, D21, D80, G14, K40, K41, M10, M20, M41

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Date posted: October 13, 2005  

Suggested Citation

Chen, Shuping and Matsumoto, Dawn A. and Rajgopal, Shivaram, Is Silence Golden? An Empirical Analysis of Firms that Stop Giving Quarterly Earnings Guidance (October 2006). Available at SSRN: http://ssrn.com/abstract=820644 or http://dx.doi.org/10.2139/ssrn.820644

Contact Information

Shuping Chen (Contact Author)
University of Texas at Austin - Red McCombs School of Business ( email )
Austin, TX 78712
United States
521.471.5328 (Phone)
Dawn Matsumoto
University of Washington - Department of Accounting ( email )
224 Mackenzie Hall, Box 353200
Seattle, WA 98195-3200
United States
206-543-4454 (Phone)
206-685-9392 (Fax)
Shivaram Rajgopal
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
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