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Country-level institutions and management earnings forecasts

Wenjing Li (), Jeff Ng (), Albert Tsang () and Oktay Urcan ()
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Wenjing Li: Jinan University
Jeff Ng: The Chinese University of Hong Kong
Albert Tsang: York University and Hong Kong Baptist University
Oktay Urcan: University of Illinois at Urbana-Champaign

Journal of International Business Studies, 2019, vol. 50, issue 1, 48-82

Abstract: Abstract Using a comprehensive sample hand-collected from the original texts of management earnings forecasts from 27 countries, we provide descriptive evidence on the country-level institutional determinants and economic consequences of forecast characteristics. Using principal component factors constructed from a number of country-level institutional variables, we find that forecast disaggregation, frequency, precision, and attribution vary significantly with the business and accounting environment of a country. We further document that better quality management forecasts are generally associated with stronger stock market reactions and higher investment efficiency. Together, our findings suggest that country-level institutions play a vital role in voluntary disclosure characteristics.

Keywords: voluntary disclosure; management forecasts; investment efficiency (search for similar items in EconPapers)
Date: 2019
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