Abstract

http://ssrn.com/abstract=901603
 
 

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Does Earnings Guidance Affect Market Returns? The Nature and Information Content of Aggregate Earnings Guidance


Carol Anilowski Cain


Wake Forest University

Mei Feng


University of Pittsburgh - Katz Graduate School of Business

Douglas J. Skinner


The University of Chicago - Booth School of Business

May 2006


Abstract:     
We investigate whether earnings guidance affects aggregate stock returns through its effects on expectations about overall earnings performance and/or aggregate expected returns. We find that aggregate guidance, especially relative levels of quarterly downward guidance, is associated with analyst- and time-series-based measures of aggregate earnings news. We find more modest evidence that guidance, again, largely downward guidance, is associated with market returns - market returns appear to respond to guidance toward the end of each calendar quarter, when most earnings preannouncements are released, and there is some evidence that firm-level guidance affects market returns in short windows around its release.

Number of Pages in PDF File: 49

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Date posted: May 16, 2006  

Suggested Citation

Anilowski Cain, Carol and Feng, Mei and Skinner, Douglas J., Does Earnings Guidance Affect Market Returns? The Nature and Information Content of Aggregate Earnings Guidance (May 2006). Available at SSRN: http://ssrn.com/abstract=901603 or http://dx.doi.org/10.2139/ssrn.901603

Contact Information

Carol Anilowski Cain
Wake Forest University ( email )
2601 Wake Forest Road
Winston-Salem, NC 27109
United States
Mei Feng
University of Pittsburgh - Katz Graduate School of Business ( email )
Pittsburgh, PA 15260
United States
Douglas J. Skinner (Contact Author)
The University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

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References:  39
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