Journal article
Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts
The Journal of finance (New York), Vol.64(5), pp.2361-2388
10/2009
DOI: 10.1111/j.1540-6261.2009.01503.x
Abstract
This paper examines the performance consequences of cutting discretionary expenditures and managing accruals to exceed analyst forecasts. We show that firms that just beat analyst forecasts with low quality earnings exhibit a short-term stock price benefit relative to firms that miss forecasts with high quality earnings. This trend, however, reverses over a 3-year horizon. Additionally, firms reducing discretionary expenditures to beat forecasts have significantly greater equity issuances and insider selling in the following year, consistent with managers understanding the myopic nature of their actions. Our results confirm survey evidence suggesting managers engage in myopic behavior to beat benchmarks.
Details
- Title: Subtitle
- Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts
- Creators
- Sanjeev Bhojraj - Cornell UniversityPaul Hribar - University of IowaMarc Picconi - Indiana University BloomingtonJohn Mcinnis - Univ Texas Austin, McCombs Sch Business, Austin, TX 78712 USA
- Resource Type
- Journal article
- Publication Details
- The Journal of finance (New York), Vol.64(5), pp.2361-2388
- Publisher
- Wiley
- DOI
- 10.1111/j.1540-6261.2009.01503.x
- ISSN
- 0022-1082
- eISSN
- 1540-6261
- Number of pages
- 28
- Language
- English
- Date published
- 10/2009
- Academic Unit
- Accounting
- Record Identifier
- 9984380378102771
Metrics
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