A Literature Synthesis of Experimental Studies on Management Earnings Guidance
Journal of Accounting Literature, Forthcoming
49 Pages Posted: 24 May 2013
Date Written: May 23, 2013
Researchers have long been interested in understanding why and how corporate managers issue earnings guidance and the effect of such guidance on stakeholders’ (investors’ and managers’) behavior. Several recent studies have employed the experimental approach to address these issues. The purpose of this paper is to analyze and synthesize the literature on experimental studies of management earnings guidance. Consistent with the literature, I organize the synthesis to reflect (a) whether, why and how management issues guidance; (b) investors’ reactions to guidance; (c) the effect of guidance on management behavior. In addition, I provide institutional information (e.g., nature and timing of guidance) about guidance as well as provide several directions for future research. The synthesis reveals that the experimental studies have made a unique contribution to this literature by (i) providing evidence on process variables that underlie some empirical associations, (ii) directly measuring managers’ personal attributes and, (iii) closing the causality gap in the guidance literature.
Keywords: experiment, financial accounting, management earnings guidance, management forecast
JEL Classification: M41
Suggested Citation: Suggested Citation