Forecast Withdrawals and Reporting Reputation

• 成果类型: Article
• 署名作者: Marshall, Nathan T.; Skinner, A. Nicole
• 署名单位: University of Colorado System; University of Colorado Boulder; University System of Georgia; University of Georgia; University System of Georgia; University of Georgia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0303
• 发表日期: 2022
• 页码: 347-377
• 关键词: management forecasts; EARNINGS FORECASTS; disclosure; CONSEQUENCES; accuracy

摘要

While accounting research has extensively examined initial guidance disclosures, the disclosures that managers make when initial forecasts become materially inaccurate have received much less attention. These updates are unique because managers are communicating that their initial forecasts are no longer correct. In this context, we examine how earnings forecast withdrawals affect managers' reporting reputation, relative to earnings revisions and nondisclosure. While managers face immediate negative market consequences after withdrawals, they enjoy reputational benefits (in the form of improved credibility) in the long run when guidance updates resume. In contrast, reporting reputation does not improve for managers who revise forecasts or for those who choose not to update at all. Difference-in-differences analyses confirm this incremental boost to credibility that is associated with withdrawals. This evidence suggests disclosing what managers do not know may be as important as disclosing what they do know when building a reporting reputation.