THE INCIDENCE OF EXPECTATIONS MANAGEMENT IN THE POST-REGULATION FAIR DISCLOSURE PERIOD

Sherry Fang Li

Accounting & Taxation, 2023, vol. 15, issue 1, 105-116

Abstract: This paper investigates the incidence of expectations management in the post-Regulation Fair Disclosure period. Using uniquely hand-collected data, I present direct evidence that the expectations management game is still played in the new regulatory environment. Management has switched to issuing pessimistic public guidance (instead of relying on private communications as in the pre-Regulation Fair Disclosure period) to dampen analysts’ expectations to a beatable level. In addition, they use both quantitative and qualitative, both earnings-related and nonearnings-related disclosures to influence analysts’ forecasts. However, I find that expectations management is decreasing during my sample period (2001-2004).

Keywords: Expectations Management; Earnings Guidance; Managerial Guidance; Regulation FD; Analysts’ Expectations (search for similar items in EconPapers)
JEL-codes: M41 M48 (search for similar items in EconPapers)
Date: 2023
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