Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts

• 成果类型: Article
• 署名作者: Bhojraj, Sanjeev; Hribar, Paul; Picconi, Marc; Mcinnis, John
• 署名单位: Cornell University; University of Iowa; Indiana University System; Indiana University Bloomington; IU Kelley School of Business; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2009.01503.x
• 发表日期: 2009
• 页码: 2361-2388
• 关键词: SEASONED EQUITY OFFERINGS; research-and-development; earnings management; stock returns; TRADING INCENTIVES; accruals; expectations; performance; decisions; QUALITY

摘要

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.