Key performance indicators as supplements to earnings: Incremental informativeness, demand factors, measurement issues, and properties of their forecasts

Dan Givoly, Yifan Li, Ben Lourie and Alexander Nekrasov ()
Additional contact information
Dan Givoly: Pennsylvania State University
Yifan Li: San Francisco State University
Ben Lourie: University of California-Irvine
Alexander Nekrasov: University of Illinois at Chicago

Review of Accounting Studies, 2019, vol. 24, issue 4, No 1, 1147-1183

Abstract: Abstract The documented decline in the information content of earnings numbers has paralleled the emergence of disclosures, mostly voluntary, of industry-specific key performance indicators (KPIs). We find that the incremental information content conveyed by KPI news is significant for many KPIs yet diminished when details about the computation of the KPI are absent or when the computation changes over time. Consistent with analysts responding to investor information demand, we find that analysts are more likely to produce forecasts for a KPI when that KPI has more information content and when earnings are less informative. We also analyze the properties of analysts’ KPI forecasts and find that KPI forecasts are more accurate than mechanical forecasts and their accuracy exceeds that of earnings forecasts. Our study contributes to the literature on the information content of KPIs as well as research on the properties of analysts’ forecasts. We provide evidence on whether and how to regulate voluntary disclosures.

Keywords: Key Performance indicators; KPI; Measurement issues; Voluntary disclosure; Analyst forecasts; KPI surprises; Incremental news; Non-financial forecasts (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s11142-019-09514-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reaccs:v:24:y:2019:i:4:d:10.1007_s11142-019-09514-y

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-019-09514-y

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().