Capital Market Consequences of Managers’ Voluntary Disclosure Styles
50 Pages Posted: 13 Oct 2010 Last revised: 19 Mar 2019
Date Written: October 12, 2010
This paper studies the capital market consequences of managers establishing an individual forecasting style. Using a manager-firm matched panel dataset, I examine whether and when manager-specific credibility matters. If managers’ forecasting styles affect their perceived credibility, then the stock price reaction to forecast news should increase with managers’ prior forecasting accuracy. Consistent with this prediction, I find that the stock price reaction to management forecast news is stronger when information uncertainty is high and when the manager has a history of issuing more accurate forecasts, indicating that individual managers benefit from establishing a personal disclosure reputation.
Keywords: Management Credibility, Earnings Guidance, Management Forecasts, Management Styles
JEL Classification: M41
Suggested Citation: Suggested Citation