Investors' reactions to management guidance forms: The influence of multiple benchmarks

• 成果类型: Article
• 署名作者: Han, Jun; Tan, Hun-Tong
• 署名单位: University of Hong Kong; Nanyang Technological University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2007.82.2.521
• 发表日期: 2007
• 页码: 521-543
• 关键词: reference points; capital-markets; numerical data; pro forma; earnings; KNOWLEDGE; DECISION; Expert; determinants; analysts

摘要

In this study, we investigate underlying mechanisms for the effects of management guidance forms on investors' judgments. We do so by comparing effects of point and range guidance with those associated with a hybrid management guidance form that combines the attributes of both point and range guidance. With respect to investors' earnings reestimates made after actual earnings announcements, we find that both the number and type of benchmarks associated with the guidance forms matter. High-knowledge investors use both primary (explicitly stated) and secondary (implicitly stated) benchmarks, whereas low-knowledge investors attend only to primary benchmarks. We also find that investors have greater confidence in their earnings estimates when management guidance explicitly provides best estimates.