Do Management Forecasts Dampen Analysts' Expectations?

37 Pages Posted: 30 Mar 2004

See all articles by Bok Baik

Bok Baik

Seoul National University

Guohua Jiang

Peking University - Guanghua School of Management

Date Written: May 2005

Abstract

We examine whether management dampens analysts' earnings expectations by issuing pessimistic management forecasts. We also investigate what firm characteristics are related to this pessimistic bias in management forecasts. Results show that there is pervasive pessimistic bias in management forecasts, and as a result, management successfully induces analysts to lower their earnings expectation to an achievable level. Furthermore, results suggest that companies with high growth prospects, high transient institutional ownership, and a long string of meeting or beating expectations are more likely to issue pessimistic forecasts to dampen analysts' expectations.

Keywords: Management Forecasts, Earnings Guidance, Pessimism in Analyst Forecasts

JEL Classification: G14, M41

Suggested Citation

Baik, Bok and Jiang, Guohua, Do Management Forecasts Dampen Analysts' Expectations? (May 2005). Available at SSRN: https://ssrn.com/abstract=522582 or http://dx.doi.org/10.2139/ssrn.522582

Bok Baik (Contact Author)

Seoul National University ( email )

Seoul
Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

Guohua Jiang

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China
+8610 62757930 (Phone)
+8610 62751470 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
554
Abstract Views
3,174
rank
55,818
PlumX Metrics