Biases in multi-year management financial forecasts:: Evidence from private venture-backed US companies

• 成果类型: Article; Proceedings Paper
• 署名作者: Armstrong, Christopher S.; Davila, Antonio; Foster, George; Hand, John R. M.
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; Stanford University; University of Navarra; IESE Business School
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-007-9033-4
• 发表日期: 2007
• 页码: 183-215
• 关键词: earnings; performance; disclosure; DISCRIMINATION; systems; GROWTH

摘要

This paper studies the properties and determinants of managers' multi-year financial forecasts. Using one- to five-year-ahead forecasts reported by private venture-backed firms, we ask whether, by how much, and why biases in managers' forecasts of revenues, expenses and profits depend on the forecasting horizon and the verifiability of assets. We find that profitability forecasts contain a strategic component, in that [1] one-year-ahead revenue (expense) forecasts are slightly and asymmetrically pessimistic (optimistic), while five-year-ahead forecasts are hugely and asymmetrically optimistic (pessimistic); and [2] biases in revenue and expense forecasts are larger, the harder to verify or more intangible-intensive are firms' assets.