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The Role of Supplementary Statements with Management Earnings Forecasts

Posted: 3 Oct 2003  

Amy P. Hutton

Boston College - Carroll School of Management

Gregory S. Miller

University of Michigan, Stephen M. Ross School of Business

Douglas J. Skinner

The University of Chicago - Booth School of Business

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Abstract

We investigate managers' decisions to supplement their firms' management earnings forecasts. We classify these supplementary disclosures as either qualitative "soft talk" disclosures or verifiable forward-looking statements. We find that managers provide "soft talk" disclosures with similar frequency for good and bad news forecasts, but are more likely to supplement good news forecasts with verifiable forward-looking statements. We examine the market response to these forecasts and find that bad news earnings forecasts are always informative but that good news forecasts are informative only when supplemented by verifiable forward-looking statements, suggesting that these statements bolster the credibility of good news forecasts.

Keywords: disclosure, earnings forecasts, forward-looking statements

JEL Classification: M41, M45

Suggested Citation

Hutton, Amy P. and Miller, Gregory S. and Skinner, Douglas J., The Role of Supplementary Statements with Management Earnings Forecasts. Journal of Accounting Research, Vol. 41, No. 5, December 2003. Available at SSRN: https://ssrn.com/abstract=449380

Amy P. Hutton

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617 552 1951 (Phone)

Gregory S. Miller

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Douglas J. Skinner (Contact Author)

The University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

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