Management Forecast Accuracy and CEO Turnover

• 成果类型: Article
• 署名作者: Lee, Sam (Sunghan); Matsunaga, Steven R.; Park, Chul W.
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; University of Oregon; University of Hong Kong
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50220
• 发表日期: 2012
• 页码: 2095-2122
• 关键词: EARNINGS FORECASTS; firm performance; disclosure; DIRECTORS; expectations; credibility; association; ISSUANCE; prices; boards

摘要

We investigate whether management forecast accuracy provides a signal regarding CEOs' ability to anticipate and respond to future events by examining the relation between management forecast errors and CEO turnover. We find that the probability of CEO turnover is positively related to the magnitude of absolute forecast errors when firm performance is poor and that this positive relation holds for both positive and negative forecast errors. In addition, we find that the positive relation between CEO turnover and the absolute forecast errors is concentrated in the sample of less entrenched CEOs. Our findings indicate that boards of directors use management forecast accuracy as a signal of CEOs' managerial ability and that managers bear a cost for issuing inaccurate forecasts.