Abstract

http://ssrn.com/abstract=902486
 
 

References (28)



 
 

Citations (73)



 


 



Expectations Management and Beatable Targets: How do Analysts React to Explicit Earnings Guidance?


Julie Cotter


University of Southern Queensland

A. Irem Tuna


London Business School

Peter D. Wysocki


University of Miami - School of Business Administration


Contemporary Accounting Research, Vol. 23, No. 3, Autumn 2006

Abstract:     
This study investigates security analysts' reactions to public management guidance and assesses whether managers successfully guide analysts toward beatable earnings targets. We use a panel dataset between 1995 and 2001 to examine the fiscal-quarter-specific determinants of management guidance and the timing, extent, and outcomes of analysts' reactions to this guidance. We find that management guidance is more likely when analysts' initial forecasts are optimistic, and, after controlling for the level of this optimism, when analysts' forecast dispersion is low. Analysts quickly react to management guidance and they are more likely to issue final meetable or beatable earnings targets when management provides public guidance. Our evidence suggests that public management guidance plays an important role in leading analysts toward achievable earnings targets.

Number of Pages in PDF File: 43

Keywords: Analysts, Earnings guidance, Expectations management, Management earnings forecasts

JEL Classification: M41, G14, D82, D84

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Date posted: May 17, 2006  

Suggested Citation

Cotter, Julie and Tuna, A. Irem and Wysocki, Peter D., Expectations Management and Beatable Targets: How do Analysts React to Explicit Earnings Guidance?. Contemporary Accounting Research, Vol. 23, No. 3, Autumn 2006. Available at SSRN: http://ssrn.com/abstract=902486

Contact Information

Julie Cotter (Contact Author)
University of Southern Queensland ( email )
Australian Centre for Sustainable Business and Dev
Toowoomba, 4350
Australia
+61 7 4631 2916 (Phone)
+61 7 4631 1770 (Fax)
HOME PAGE: http://www.usq.edu.au/users/cotter/
Ayse Irem Tuna
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
Peter D. Wysocki
University of Miami - School of Business Administration ( email )
Department of Accounting - K/E 308
5250 University Drive
Coral Gables, FL 33146-6531
United States
305-284-8618 (Phone)
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