Understanding the decision-making processes of investors using management earnings guidance information

Matthew Maylath

Accounting Research Journal, 2025, vol. 38, issue 5-6, 660-675

Abstract: PurposeManagement earnings guidance is a form of voluntary disclosure that is an important topic in accounting research related to investor judgment and decision-making (JDM). The purpose of this study is to adapt prior research on guidance and investor JDM by integrating aspects of both guidance content and guidance provision. Using semi-structured interviews, this study corroborates evidence found by prior studies, while also extending knowledge about investor JDM when integrating the concepts of guidance news and the impact of COVID-19.Design/methodology/approachThis study uses task-based, semi-structured interviews of non-professional investors where they make investment decisions based on given guidance information. Both deductive and inductive coding are used to carry out thematic analysis of the interviews.FindingsResults of the semi-structured interviews corroborated prior studies, and several new themes emerged when combining the new elements of guidance content, including the importance of uncertainty as a decision-making factor and a shift in focus to analyst forecasts over guidance when the concept of guidance news was introduced.Originality/valueThere are no known studies that have explored the joint impact of guidance content and guidance provision on investor JDM in a qualitative sense. This study adapts guidance provision elements of a prior study and adds elements of guidance content to see how they jointly impact investor JDM.

Keywords: Management earnings guidance; COVID-19; Guidance pattern consistency; Guidance news; Investor judgment and decision-making; Semi-structured interviews (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-11-2024-0360

DOI: 10.1108/ARJ-11-2024-0360

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