CAPITAL MARKET CONSEQUENCES OF EXPECTATIONS MANAGEMENT IN THE POSTREGULATION FAIR DISCLOSURE PERIOD

Sherry Fang Li

Accounting & Taxation, 2019, vol. 11, issue 1, 11-20

Abstract: This paper investigates the capital market consequences of expectations management in the postRegulation Fair Disclosure period. Results show that investors punish firms that deliberately issue pessimistic public guidance to dampen analysts’ expectations to a beatable level in the post-Regulation Fair Disclosure Era. I find that on average, the negative stock price effects caused by management’s pessimistic guidance dominate the positive stock price effects associated with the positive earnings surprises. Furthermore, both the short-term stock return over the combined guidance plus earnings announcement window and the long-term total period return are more negative for guidance firms than for firms that do not guide and thus miss financial analysts’ expectations

Keywords: Expectations Management; Earnings Guidance; Managerial Guidance; Regulation Fair Disclosure; Analysts’ Expectations; Capital Market (search for similar items in EconPapers)
JEL-codes: M41 M48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-2.pdf (application/pdf)

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:ibf:acttax:v:11:y:2019:i:1:p:11-20

Access Statistics for this article

Accounting & Taxation is currently edited by Terrance Jalbert

More articles in Accounting & Taxation from The Institute for Business and Finance Research
Bibliographic data for series maintained by Mercedes Jalbert ( this e-mail address is bad, please contact ).