Managers' Forecast Guidance of Analysts: International Evidence

20 Pages Posted: 18 Jun 2002 Last revised: 1 Apr 2014

See all articles by Lawrence D. Brown

Lawrence D. Brown

Temple University - Department of Accounting

Huong N. Higgins

Worcester Polytechnic Institute - School of Business

Abstract

We consider forecast guidance as a mechanism that managers use to avoid negative earnings surprises. Modeling forecast guidance using methods by Matsumoto, [Accounting Review 77 (3) (2002) 483-514] and Bartov et al. [Journal of Accounting and Economics 33 (2) (2002) 173-204], we show that managers in strong-investor-protection countries are more likely to utilize forecast guidance to avoid negative earnings surprises than managers in weak-investor-protection countries. We also show that US managers are more prone to use forecast guidance to avoid negative earnings surprises than managers in other countries. Our results provide insight into the information dissemination process and how managers behave in response to weak regulation of informal disclosures in different investor protection environments.

Keywords: Forecast guidance, Analysts, Earnings, International, Investor protection

JEL Classification: M41, M43, F00, G29, G30, K00, M20

Suggested Citation

Brown, Lawrence D. and Higgins, Huong N., Managers' Forecast Guidance of Analysts: International Evidence. Journal of Accounting and Public Policy, Vol. 24, No. 4, 2005. Available at SSRN: https://ssrn.com/abstract=314579 or http://dx.doi.org/10.2139/ssrn.314579

Lawrence D. Brown (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Huong N. Higgins

Worcester Polytechnic Institute - School of Business ( email )

100 Institute Road
Worcester, MA 01609
United States
508-831-5626 (Phone)
508-831-5720 (Fax)

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