Management Earnings Forecasts: A Review and Framework

50 Pages Posted: 2 Aug 2006 Last revised: 22 Jan 2008

See all articles by D. Eric Hirst

D. Eric Hirst

University of Texas at Austin

Lisa Koonce

University of Texas

Shankar Venkataraman

Bentley University - McCallum Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 11, 2008

Abstract

In this paper, we provide a framework in which to view management earnings forecasts. Specifically, we categorize earnings forecasts as having three components - antecedents, characteristics, and consequences that roughly correspond to the timeline associated with an earnings forecast. By evaluating management earnings forecast research within the context of this framework, we render three conclusions. First, forecast characteristics appear to be the least well-understood component of earnings forecasts - both in terms of theory and empirical research - even though it is the component over which managers have the most control. Second, much of the prior research focuses on how one forecast antecedent or characteristic influences forecast consequences and does not study potential interactions among the three components. Third, much of the prior research ignores the iterative nature of management earnings forecasts - that is, forecast consequences of the current period influence antecedents and chosen characteristics in subsequent periods. Implications for researchers as well as educators, managers, investors, and regulators are provided.

Keywords: Management Earnings Forecasts, Framework, Review

JEL Classification: M41, M45

Suggested Citation

Hirst, D. Eric and Koonce, Lisa L. and Venkataraman, Shankar, Management Earnings Forecasts: A Review and Framework (January 11, 2008). Available at SSRN: https://ssrn.com/abstract=921583 or http://dx.doi.org/10.2139/ssrn.921583

D. Eric Hirst (Contact Author)

University of Texas at Austin ( email )

CBA 4M.202 McCombs School of Business
Austin, TX 78712
United States
512-471-5565 (Phone)
512-471-3904 (Fax)

HOME PAGE: http://www.mccombs.utexas.edu/faculty/Eric.hirst/

Lisa L. Koonce

University of Texas ( email )

Dept. of Accounting
McCombs School of Business
Austin, TX 78712
United States
512-471-5576 (Phone)
512-471-3904 (Fax)

Shankar Venkataraman

Bentley University - McCallum Graduate School of Business ( email )

Waltham, MA 02452-4705
United States

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