Career Concerns and Management Earnings Guidance

• 成果类型: Article
• 署名作者: Pae, Suil; Song, Chang Joon; Yi, Andrew C.
• 署名单位: Sungkyunkwan University (SKKU); Hanyang University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12182
• 发表日期: 2016
• 页码: 1172-1198
• 关键词: discretionary disclosure; ceo turnover; FORECAST ACCURACY; bad-news; voluntary disclosure; corporate governance; SECURITY ANALYSTS; PROXY CONTESTS; INFORMATION; expectations

摘要

This study provides evidence that managers' career concerns affect their earnings guidance decisions. We hypothesize that CEOs who are relatively more concerned about assessments of their abilities have stronger incentives to guide the market expectations of earnings downwards to increase the likelihood of meeting or beating the expectations. Consistent with this hypothesis, we find that (i) short-tenured CEOs, CEOs promoted from inside the firm, and nonfounder CEOs are more likely to provide downward earnings guidance when they have bad news, and (ii) their downward guidance tends to be more conservative. In response, analysts revise earnings forecasts less for the downward guidance provided by more career-concerned CEOs. This indicates that analysts rationally incorporate these CEOs' stronger incentives to be conservative in their earnings guidance. Consequently, we find that CEOs with greater career concerns are not more likely to beat the market expectations, even when they provide more conservative downward guidance.