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Article: The informativeness of earnings and management's issuance of earnings forecasts

TitleThe informativeness of earnings and management's issuance of earnings forecasts
Authors
Lennox, CSPark, CW
KeywordsEarnings Informativeness
Management Forecast
Issue Date2006
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae
Citation
Journal Of Accounting And Economics, 2006, v. 42 n. 3, p. 439-458 How to Cite?
DOI: http://dx.doi.org/10.1016/j.jacceco.2006.05.001
AbstractTheory suggests that managers issue earnings forecasts to reduce information asymmetry. An earnings forecast is more effective in reducing information asymmetry if it contains earnings news that is relatively more informative about the firm's value. We hypothesize that a manager is more likely to issue an earnings forecast if investors perceive that earnings are more informative. We measure earnings informativeness by estimating the firm's earnings response coefficient (ERC) in quarters prior to the forecast issuance decision. Consistent with our hypothesis, we find that the firm's historic ERC is positively associated with management's issuance of earnings forecasts. © 2006 Elsevier B.V. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/177970
ISSN
0165-4101
2023 Impact Factor: 5.4
2023 SCImago Journal Rankings: 8.337
ISI Accession Number ID
WOS:000241013500006
References
References in Scopus

 

DC FieldValueLanguage
dc.contributor.authorLennox, CSen_US
dc.contributor.authorPark, CWen_US
dc.date.accessioned2012-12-19T09:41:06Z-
dc.date.available2012-12-19T09:41:06Z-
dc.date.issued2006en_US
dc.identifier.citationJournal Of Accounting And Economics, 2006, v. 42 n. 3, p. 439-458en_US
dc.identifier.issn0165-4101en_US
dc.identifier.urihttp://hdl.handle.net/10722/177970-
dc.description.abstractTheory suggests that managers issue earnings forecasts to reduce information asymmetry. An earnings forecast is more effective in reducing information asymmetry if it contains earnings news that is relatively more informative about the firm's value. We hypothesize that a manager is more likely to issue an earnings forecast if investors perceive that earnings are more informative. We measure earnings informativeness by estimating the firm's earnings response coefficient (ERC) in quarters prior to the forecast issuance decision. Consistent with our hypothesis, we find that the firm's historic ERC is positively associated with management's issuance of earnings forecasts. © 2006 Elsevier B.V. All rights reserved.en_US
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jaeen_US
dc.relation.ispartofJournal of Accounting and Economicsen_US
dc.subjectEarnings Informativenessen_US
dc.subjectManagement Forecasten_US
dc.titleThe informativeness of earnings and management's issuance of earnings forecastsen_US
dc.typeArticleen_US
dc.identifier.emailPark, CW: acparkc@hku.hken_US
dc.identifier.authorityPark, CW=rp01090en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1016/j.jacceco.2006.05.001en_US
dc.identifier.scopuseid_2-s2.0-33748483643en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-33748483643&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume42en_US
dc.identifier.issue3en_US
dc.identifier.spage439en_US
dc.identifier.epage458en_US
dc.identifier.isiWOS:000241013500006-
dc.publisher.placeNetherlandsen_US
dc.identifier.scopusauthoridLennox, CS=14521159700en_US
dc.identifier.scopusauthoridPark, CW=37062708100en_US
dc.identifier.issnl0165-4101-

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