Capital Market Consequences of Managers’ Voluntary Disclosure Styles
50 Pages Posted: 24 Aug 2011
Date Written: August 24, 2011
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
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