Management Forecast Consistency

Journal of Accounting Research, Forthcoming

45 Pages Posted: 10 Oct 2013 Last revised: 30 Jul 2019

See all articles by Gilles Hilary

Gilles Hilary

Georgetown University - Department of Accounting and Business Law

Charles Hsu

Hong Kong University of Science & Technology

Rencheng Wang

Singapore Management University - School of Accountancy

Multiple version iconThere are 2 versions of this paper

Date Written: October 4, 2013

Abstract

We posit that management forecasts that are predictable transformations of realized earnings without random errors are more informative than unbiased forecasts which manifest small but unpredictable errors, even if biased forecasts are less accurate. Consistent with this intuition we find that managers who make consistent forecasting errors have a greater ability to influence investor reactions and analyst revisions, even after controlling for the effect of accuracy. This effect is more economically significant and statistically robust than that of forecast accuracy. More sophisticated investors and experienced analysts are found to have a better understanding of the benefits of consistent management forecasts.

Keywords: Management forecast consistency, management forecast accuracy, investor reactions, analyst revisions

JEL Classification: M41, C90

Suggested Citation

Hilary, Gilles and Hsu, Charles and Wang, Rencheng, Management Forecast Consistency (October 4, 2013). Journal of Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2337770

Gilles Hilary (Contact Author)

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Charles Hsu

Hong Kong University of Science & Technology ( email )

Hong Kong
Hong Kong
852-2358-7568 (Phone)
852-2358-1693 (Fax)

Rencheng Wang

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

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