Earnings Management: The Effect of Ex Ante Earnings Expectations
Open Access
- 1 October 2000
- journal article
- review article
- Published by SAGE Publications in Journal of Accounting, Auditing & Finance
- Vol. 15 (4) , 371-392
- https://doi.org/10.1177/0148558x0001500401
Abstract
SEC Chairman Arthur Levitt has recently expressed concerns about the use of earnings management to meet Wall Street earnings expectations set by analysts' forecasts. We investigate whether managers aim to “meet or beat” analysts' forecasts and examine the influence of analysts' forecast dispersion on this aim. Our results are consistent with managers aligning earnings with market expectations established by analysts' forecasts. Additionally, our evidence is consistent with managers behaving as though they have greater incentives to increase income in settings where the dispersion in analysts' forecasts is low.Keywords
This publication has 37 references indexed in Scilit:
- Are Earnings Surprises Costly?SSRN Electronic Journal, 1999
- Investor Reactions to Financial Analysts' Research ReportsJournal of Accounting Research, 1995
- Accounting and the credibility of management forecasts*Contemporary Accounting Research, 1992
- The effect of size on the magnitude of long‐window earnings response coefficients*Contemporary Accounting Research, 1992
- Revisions in Corporate Earnings Forecasts and Common Stock ReturnsCFA Magazine, 1991
- Relationship between Differential Amounts of Prior Information and Security Return VariabilityJournal of Accounting Research, 1989
- Evidence of Earnings Management from the Provision for Bad DebtsJournal of Accounting Research, 1988
- Dispersion of Expectations and Trading VolumeJournal of Business Finance & Accounting, 1987
- A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for HeteroskedasticityEconometrica, 1980
- Agency Problems and the Theory of the FirmJournal of Political Economy, 1980