Short-term earnings guidance and accrual-based earnings management

• 成果类型: Article
• 署名作者: Call, Andrew C.; Chen, Shuping; Miao, Bin; Tong, Yen H.
• 署名单位: Arizona State University; Arizona State University-Tempe; University of Texas System; University of Texas Austin; National University of Singapore; Nanyang Technological University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-013-9270-7
• 发表日期: 2014
• 页码: 955-987
• 关键词: voluntary disclosure; forecasts; QUALITY; determinants; CONSEQUENCES; association; manipulation; performance; OFFERINGS; errors

摘要

Motivated by recent practitioners' concerns that short-term earnings guidance leads to managerial myopia, we investigate the impact of short-term earnings guidance on earnings management. Using a propensity-score matched control sample, we find strong and consistent evidence that the issuance of short-term quarterly earnings guidance is associated with less, rather than more, earnings management. We also find that regular guiders exhibit less earnings management than do less regular guiders. Our findings hold using both abnormal accruals and discretionary revenues to measure earnings management and after controlling for potential reverse causality concerns. Furthermore, in a setting where managers have particularly strong capital market incentives to manage earnings, we corroborate these findings by documenting that earnings guidance either has no impact on or mitigates earnings management. Overall, our evidence does not support the criticism from practitioners that short-term earnings guidance leads to more earnings management.