How Patterns of Past Guidance Provision Affect Investor Judgments: The Joint Effect of Guidance Frequency and Guidance Pattern Consistency

• 成果类型: Article
• 署名作者: Tang, Michael; Venkataraman, Shankar
• 署名单位: New York University; University System of Georgia; Georgia Institute of Technology
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51905
• 发表日期: 2018
• 页码: 327-348
• 关键词: MANAGEMENT EARNINGS FORECASTS; disclosure; INFORMATION; credibility; MARKET; CONSEQUENCES; uncertainty; outcomes; choices; FIRMS

摘要

Theory suggests that the provision of voluntary disclosure, in itself, is informative to investors, but prior empirical research largely focuses on investors' reaction to the content of disclosure. We extend the literature on earnings guidance by experimentally examining how investors react to a firm's historical pattern of guidance provision, holding constant guidance content. We manipulate two dimensions of guidance provision-how often guidance is provided (frequency), and whether guidance is provided for the same quarter(s) across consecutive years (pattern consistency). We find that consistency positively impacts investors' confidence and likelihood of investing because investors associate consistency with lesser managerial opportunism, but consistency matters only when frequency is low. Our results shed light on an important dimension of guidance provision unexamined in prior research-guidance consistency-and highlight when it can influence investor judgments even when key elements of a firm's historical guidance content are held constant.