A Temporal Analysis of Expectation Management: Evidence from Public Management Earnings Forecasts
Abstract:We investigate the time trend of expectation management through management earnings forecasts to avoid negative earnings surprise. We find that the percentage of firms missing analyst earnings target before downward management guidance but meeting revised analyst earnings target have more than tripled from 5.5% in 1995 to 20.0% in 2014. We also show increase of both the magnitude of pessimistic management forecast bias and analysts' tendency to converge to management guidance, two potential explanations for in… Show more
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