Do Managers' Accrual Decisions Speak Louder than Words?

30 Pages Posted: 11 Mar 1998

See all articles by Glen A. Hansen

Glen A. Hansen

Pennsylvania State University - Department of Accounting

Christopher F. Noe

Massachusetts Institute of Technology - Sloan School of Management

Date Written: January 1998

Abstract

This paper examines whether analyst earnings forecast revisions around management earnings forecasts are conditioned on managers' previous accrual decisions. We find that analysts rely less heavily on management earnings forecast information when it conflicts with prior signals about earnings performance contained in accruals. Moreover, we find that analyst earnings forecast errors decline by a smaller amount around management earnings forecasts when management earnings forecast information and prior accrual signals are inconsistent. These findings suggest that the influence of management earnings forecasts on analysts' earnings expectations is contingent upon managers being able to convince analysts as to the informativeness of these disclosures in light of prior signals about earnings performance contained in accruals.

JEL Classification: M41, D82, G29

Suggested Citation

Hansen, Glen Arthur and Noe, Christopher F., Do Managers' Accrual Decisions Speak Louder than Words? (January 1998). Available at SSRN: https://ssrn.com/abstract=66273 or http://dx.doi.org/10.2139/ssrn.66273

Glen Arthur Hansen (Contact Author)

Pennsylvania State University - Department of Accounting ( email )

University Park, PA 16802-3306
United States
814-863-4002 (Phone)
814-863-8393 (Fax)

Christopher F. Noe

Massachusetts Institute of Technology - Sloan School of Management ( email )

77 Massachusetts Avenue
Cambridge, MA 02139-4307
United States

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