Trading incentives to meet the analyst forecast

Sarah McVay (), Venky Nagar () and Vicki Wei Tang ()
Additional contact information
Sarah McVay: New York University
Venky Nagar: University of Michigan
Vicki Wei Tang: Georgetown University

Review of Accounting Studies, 2006, vol. 11, issue 4, No 6, 575-598

Abstract: Abstract We examine stock sales as a managerial incentive to help explain the discontinuity around the analyst forecast benchmark. We find that the likelihood of just meeting versus just missing the analyst forecast is strongly associated with subsequent managerial stock sales. Moreover, we provide evidence that managers manage earnings prior to just meeting the threshold and selling their shares. Finally, the relation between just meeting and subsequently selling shares does not hold for non-manager insiders, who arguably cannot affect the earnings outcome, and is weaker in the presence of an independent board, suggesting that good corporate governance mitigates this strategic behavior.

Keywords: Analyst forecasts; Earnings; Managerial compensation; Insider trading; Corporate governance (search for similar items in EconPapers)
JEL-codes: G34 J33 M41 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11142-006-9017-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:reaccs:v:11:y:2006:i:4:d:10.1007_s11142-006-9017-9

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-006-9017-9

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().