Mandatory Management Forecasts and Lender Expectations Management

61 Pages Posted: 2 Jun 2019 Last revised: 24 Mar 2020

See all articles by Andrew Ferguson

Andrew Ferguson

Department of Accounting, UTS

Gabriel Pundrich

University of Florida; Massachusetts Institute of Technology (MIT)

Date Written: March 23, 2020


The objective of this study is to investigate whether management forecasts characteristics change around key debt financing events. Examining a large sample of mandatory management forecasts of quarterly expenditure disclosed by early-stage mining companies, we find project finance approval results in managers increasing overestimates of cash outflows or creating ‘budget slack.’ This is consistent with managers using forecasts to ‘underpromise and overdeliver’ during project development.

Keywords: mandatory management forecasts, project finance, expectations management

JEL Classification: G32

Suggested Citation

Ferguson, Andrew and Pundrich, Gabriel, Mandatory Management Forecasts and Lender Expectations Management (March 23, 2020). Available at SSRN: or

Andrew Ferguson (Contact Author)

Department of Accounting, UTS ( email )

PO Box 123 Broadway
Sydney, NSW 2007
61 2 9514 3565 (Phone)

Gabriel Pundrich

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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