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Quarterly earnings guidance and real earnings management
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García Osma, Beatriz, Guillamón Saorín, Encarna and Mercado, Facundo (2023) Quarterly earnings guidance and real earnings management. Journal of Business Finance & Accounting, 50 (5-6). pp. 1029-1059. doi:10.1111/jbfa.12683 ISSN 0306-686X.
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Business Fin Account - 2022 - Garc a Osma - Quarterly earnings guidance and real earnings management.pdf - Published Version - Requires a PDF viewer. Available under License Creative Commons Attribution 4.0. Download (407Kb) | Preview |
Official URL: http://dx.doi.org/10.1111/jbfa.12683
Abstract
We examine if quarterly earnings guidance induces real earnings management. Quarterly guidance may cause myopia and inefficient decision-making, if managers become overly concerned with setting and beating short-term earnings targets. We test these associations on a large sample of US firms. Our evidence suggests that quarterly guidance is informative and lowers myopic incentives. However, our analyses also reveal endogenous associations exist between guidance and real earnings management. In contrast with existing concerns over frequent guiders, we find that guidance appears problematic in infrequent guiders, and in firms that issue good news earnings guidance and that operate in settings where earnings pressures are high.
Item Type: | Journal Article | |||||||||
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Subjects: | H Social Sciences > HG Finance | |||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School | |||||||||
Library of Congress Subject Headings (LCSH): | Corporate profits , Corporations -- Finance, Corporations -- Finance -- Management -- United States, Business enterprises -- Finance -- Management -- United States, Short-term business financing | |||||||||
Journal or Publication Title: | Journal of Business Finance & Accounting | |||||||||
Publisher: | Wiley | |||||||||
ISSN: | 0306-686X | |||||||||
Official Date: | May 2023 | |||||||||
Dates: |
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Volume: | 50 | |||||||||
Number: | 5-6 | |||||||||
Page Range: | pp. 1029-1059 | |||||||||
DOI: | 10.1111/jbfa.12683 | |||||||||
Status: | Peer Reviewed | |||||||||
Publication Status: | Published | |||||||||
Access rights to Published version: | Open Access (Creative Commons) | |||||||||
Date of first compliant deposit: | 2 February 2023 | |||||||||
Date of first compliant Open Access: | 3 February 2023 | |||||||||
RIOXX Funder/Project Grant: |
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