Political uncertainty and voluntary management earnings forecasts

Kaitang Zhou, Shushu Jiang and Zhiming Ma

China Journal of Accounting Studies, 2017, vol. 5, issue 2, 256-273

Abstract: This paper examines the effect of political uncertainty on voluntary management earnings forecasts. Using Chinese A-share listed companies from 2006 to 2013, we find that managers are more likely to issue earnings forecasts and increase earnings forecasts precision after the turnover of Provincial Party Secretary. The effect is more pronounced for Non-State Owned Enterprises, when the new official comes from other provinces, or for firms with more analyst coverage. Further analysis shows that the market reaction to earnings forecasts is stronger when political uncertainty is high. Our study sheds light on the real effects of political uncertainty and contributes to the understanding of voluntary management earnings forecast behaviours.

Date: 2017
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DOI: 10.1080/21697213.2017.1341751

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