The informativeness of earnings and management's issuance of earnings forecasts

• 成果类型: Article
• 署名作者: Lennox, Clive S.; Park, Chul W.
• 署名单位: Hong Kong University of Science & Technology; Sungkyunkwan University (SKKU)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2006.05.001
• 发表日期: 2006
• 关键词: cross-sectional determinants; disclosure

摘要

Theory suggests that managers issue earnings forecasts to reduce information asymmetry. An earnings forecast is more effective in reducing information asymmetry if it contains earnings news that is relatively more informative about the firm's value. We hypothesize that a manager is more likely to issue an earnings forecast if investors perceive that earnings are more informative. We measure earnings informativeness by estimating the firm's earnings response coefficient (ERC) in quarters prior to the forecast issuance decision. Consistent with our hypothesis, we find that the firm's historic ERC is positively associated with management's issuance of earnings forecasts. (c) 2006 Elsevier B.V. All rights reserved.