Earnings Pressure and Corporate Product Refocus

• 成果类型: Article
• 署名作者: Shen, Xingyu; Yan, Jiawen; Yeung, P. Eric
• 署名单位: Virginia Polytechnic Institute & State University; National University of Singapore; Cornell University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826; 1558-7967
• DOI: 10.2308/TAR-2023-0569
• 发表日期: 2026-09
• 页码: 467-503
• 关键词: earnings pressure; cost cutting; product market; diversification and refocus; Agency problems; ANALYST COVERAGE; AGENCY COSTS; Social media; management; firm; INFORMATION; CEOS; OWNERSHIP; DYNAMICS; online

摘要

Facing pressure to meet short-term earnings expectations, corporate managers often take actions that are perceived as value-destroying. Our study provides empirical evidence supporting an alternative view: earnings pressure can discipline managers to undertake value-enhancing actions by refocusing on the firm's core products. Consistent with this product refocus hypothesis, we find that firms under earnings pressure reduce investment in non-core products, leading to the subsequent underperformance of these non-core products, whereas the performance of core products remains unaffected. As predicted, product refocus is stronger when managers exhibit ex ante high-level agency problems. To strengthen identification, we exploit shocks arising from analyst brokerage mergers and closures. Our study suggests a bright side of earnings pressure-it helps reduce agency-motivated product diversification.