Information aggregation to form earnings expectations: Evidence from CEO networks and management forecast accuracy

• 成果类型: Article
• 署名作者: Lee, Sam (Sunghan); Matsunaga, Steven R.; Oh, Peter (Seung Hwan); Hong, Hyun A.
• 署名单位: Iowa State University; University of Oregon; McGill University; University of California System; University of California Riverside; University of Oregon
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12933
• 发表日期: 2024
• 页码: 1000-1030
• 关键词: board connections; social ties; INTERLOCKS; association; ability; friends; price

摘要

We investigate whether a larger CEO employment network provides access to information that improves firms' earnings forecasts and find a significantly positive relation between CEO employment network size and management earnings forecast accuracy. Our results suggest that firms use information obtained from CEO contacts to increase the accuracy of their earnings forecasts. Our conclusion is further supported by evidence of positive associations between CEO employment network size and the likelihood, frequency, and precision of management earnings forecasts. We also find that CEO employment network size is positively related to analysts' reactions to the forecast news and the accuracy of management earnings forecasts relative to analyst forecasts. Overall, our results are consistent with a larger CEO employment network generating external information that increases the accuracy of firms' earnings forecasts.