Management guidance

Mei Feng and Lian Fen Lee

Chapter 8 in Handbook on the Financial Reporting Environment, 2025, pp 140-156 from Edward Elgar Publishing

Abstract: Management guidance is a voluntary disclosure tool firms employ to communicate their expectations about future financial performance. When issuing guidance, managers face a series of decisions such as whether to provide guidance at all, the timing of such disclosures, the specific types of information to disclose (e.g., earnings, revenue, cash flow), the level of detail and precision in quantitative forecasts (e.g., point estimates or ranges), and the time horizon covered by the guidance (e.g., quarterly or annual). This chapter discusses general trends in guidance practices and leverages academic research to illuminate the potential benefits and costs associated with various guidance decisions. By understanding these trade-offs, capital market participants can better interpret and assess management guidance and make more informed decisions.

Keywords: Guidance; Forecasts; Voluntary disclosure (search for similar items in EconPapers)
Date: 2025
ISBN: 9781800888678
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