A Discussion of 'What Do Management Earnings Forecasts Convey about the Macroeconomy?'

Forthcoming in Journal of Accounting Research

Posted: 18 Mar 2013

See all articles by Maria Ogneva

Maria Ogneva

University of Southern California - Marshall School of Business

Date Written: January 16, 2013

Abstract

While numerous studies in accounting and finance are devoted to predicting firm-specific earnings and understanding the forecasting behavior of analysts and management, it is unclear whether or how accounting information at the micro level can be applied to the macroeconomy. Bonsall, Bozanic, and Fischer [2012], henceforth BBF, are part of a growing literature that seeks to address this question. BBF document that firm-specific management forecast releases are significantly positively associated with announcement-window aggregate stock market returns and further show that this significant market reaction is concentrated among “bellwether” firms. In this discussion, I argue that although BBF provide convincing evidence on the presence of timely macroeconomic information in management earnings forecasts, the exact nature of this information is somewhat of a black box. BBF’s results also raise the question of how the macroeconomic information content of management earnings forecasts differs from that of realized earnings. The answers to these questions can help reconcile the significantly positive association between management forecast surprises and aggregate stock returns with the previously documented negative relation between realized earnings surprises and aggregate stock returns.

Keywords: aggregate earnings, management forecasts, macroeconomic indicators

JEL Classification: E44, G14, M41

Suggested Citation

Ogneva, Maria, A Discussion of 'What Do Management Earnings Forecasts Convey about the Macroeconomy?' (January 16, 2013). Forthcoming in Journal of Accounting Research. Available at SSRN: https://ssrn.com/abstract=2235314

Maria Ogneva (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
910
PlumX Metrics