Management Forecast and Stock Price informativeness

Yu-Hsuan Chung, An-An Chiu and Shaio Yan Huang
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Yu-Hsuan Chung: Department of Accounting and Information Technology, National Chung Cheng University, Taiwan
An-An Chiu: Department of International Business, Feng Chia University, Taiwan
Shaio Yan Huang: Professor, Department of Accounting and Information Technology, National Chung Cheng University, Taiwan

International Journal of Business and Economics, 2021, vol. 20, issue 3, 215-232

Abstract: This study examines two financial forecast legal environments, mandatory versus voluntary by investigating the relationship between the finical forecast disclosure reform and firm-specific future earnings response coefficient (FERC). The study collects the sample from 2003 to 2009 and focuses on Taiwan where the authority reformed the financial forecast regime in 2005. The study provides evidence that the financial forecast influences the FERC and finds that the impact of stock price informativeness only on mandatory financial forecast regime. Further, the result reveals that the financial forecast of the complete form is more likely with high FERC's than that of summary form. Last, the study suggests that the mandatory financial forecast allows investors to have better expectations of future earnings.

Keywords: Management Forecasts; Financial Forecast Reform; Future Earnings Response Coefficient; Price Informativeness (search for similar items in EconPapers)
JEL-codes: G14 G38 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ijb:journl:v:20:y:2021:i:3:p:215-232

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