Earnings Benchmark Hierarchy

Accounting & Finance, Forthcoming

36 Pages Posted: 27 Mar 2015 Last revised: 30 Mar 2015

See all articles by Mariela Carvajal

Mariela Carvajal

University of Otago

Jeffrey Coulton

UNSW Business School

Andrew B. Jackson

UNSW Australia Business School, School of Accounting

Date Written: March 25, 2015

Abstract

We examine the hierarchy of earnings benchmarks in Australia. Our results demonstrate a disconnect between the actions managers appear to take, and the market reaction to firms exceeding or just missing earnings benchmarks. The actions of managers appear consistent with them acting in a manner to avoid making losses and earnings decreases. On the other hand, the market reacts in a manner where the analysts' earnings forecast is at the top of the earnings benchmark hierarchy. However, for firms without analyst coverage, the reporting of positive earnings is the predominant earnings benchmark.

Keywords: Thresholds, Analyst Forecasts, Earnings Benchmarks, Valuation

JEL Classification: M41

Suggested Citation

Carvajal, Mariela and Coulton, Jeffrey J. and Jackson, Andrew B., Earnings Benchmark Hierarchy (March 25, 2015). Accounting & Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2584248

Mariela Carvajal

University of Otago ( email )

Dunedin
New Zealand

Jeffrey J. Coulton

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia
+61293855811 (Phone)
+93855925 (Fax)

Andrew B. Jackson (Contact Author)

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia

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