Macroeconomic Uncertainty and Management Forecast Accuracy

2020 ◽  
Author(s):  
Norio Kitagawa
Keyword(s):  
Forecast Accuracy ◽  
Management Forecast ◽  
Macroeconomic Uncertainty

Information Technology Capability, Management Forecast Accuracy, and Analyst Forecast Revisions

2018 ◽  
Vol 32 (3) ◽  
pp. 49-70 ◽  
Author(s):  
Feiqi Huang ◽  
He Li ◽  
Tawei Wang
Keyword(s):  
Forecast Accuracy ◽  
Analyst Forecast ◽  
Management Forecasts ◽  
Forecast Revisions ◽  
It Capability ◽  
Management Forecast ◽  
Prior Literature ◽  
Technology Capability ◽  
Information Technology Capability ◽  
The Relationship

SYNOPSISPrior literature has firmly established the relationship between IT capability and firm performance. In this paper, we extend the research in this field and investigate (1) whether IT capability contributes to management forecast accuracy, and (2) whether IT capability improves the informativeness of management forecasts and enhances the extent to which analysts incorporate management forecasts in their revisions. Using firms listed on InformationWeek 500 as our high IT capability group, we empirically demonstrate that firms with high IT capability are able to increase management forecast accuracy, and that analysts incorporate more information from management forecasts in their revisions if the firm has high IT capability.

Are CEOs and CFOs Rewarded for Disclosure Quality?

2014 ◽  
Vol 90 (3) ◽  
pp. 1013-1047 ◽  
Author(s):  
Kai Wai Hui ◽  
Steven R. Matsunaga
Keyword(s):  
Boards Of Directors ◽  
Forecast Accuracy ◽  
High Growth ◽  
Effective Communication ◽  
Disclosure Quality ◽  
Management Forecast ◽  
Growth Firms ◽  
Financial Disclosures ◽  
Cfo Compensation

ABSTRACT This study provides evidence regarding the importance that boards of directors place on effective communication with the investor community by examining whether CEO and CFO compensation are related to the quality of the firm's financial disclosures. Using an index derived from analyst forecast characteristics and management forecast accuracy to measure disclosure quality, we find changes in the annual bonus for both the CEO and CFO to be positively associated with changes in disclosure quality. We also find that the relation is stronger for high-growth firms, firms that have stronger governance structures, and for executives with lower equity incentives. Overall, our findings provide insight into the importance that boards place on effective communication with investors as a responsibility of the CEO and CFO and, therefore, provide them with contractual incentives to address the moral hazard problem associated with voluntary disclosures. JEL Classifications: M41.

Assessing the Accuracy of Forward-Looking Information in Debt Contract Negotiations: Management Forecast Accuracy and Private Loans

2020 ◽  
Vol 32 (1) ◽  
pp. 79-102
Author(s):  
Peter R. Demerjian ◽  
John B. Donovan ◽  
Jared Jennings
Keyword(s):  
Forecast Accuracy ◽  
Debt Contracts ◽  
Earnings Volatility ◽  
Contract Negotiations ◽  
External Auditors ◽  
Future Performance ◽  
Management Forecast ◽  
Debt Contract ◽  
Future Value ◽  
Forward Looking

ABSTRACT We examine a possible mechanism by which the lender can evaluate the borrower's ability to produce accurate forward-looking information. Forward-looking information is important to lenders to project the borrower's future performance and the loan's expected payoff. However, unlike historical financial statements, forward-looking information cannot be verified by lenders or external auditors. We contend that the borrower's past forecast accuracy provides a measure that allows the lender to assess the borrower's ability to produce accurate forward-looking information, allowing the lender to gain greater confidence in the borrower's projections of future value. Consistent with this argument, we find that the borrower's past forecast accuracy is negatively associated with the loan's initial interest spread. We also find that this relation is concentrated among non-relationship loans and borrowers with greater earnings volatility. Finally, we find that debt contracts to borrowers with more accurate managerial forecasts exhibit less interest rate mispricing. JEL Classifications: G30; M40; M41.

scholarly journals The Effect of Ex Ante Management Forecast Accuracy on the Post-Earnings-Announcement Drift

2012 ◽  
Vol 87 (5) ◽  
pp. 1791-1818 ◽  
Author(s):  
Li Zhang
Keyword(s):  
Earnings Announcements ◽  
Forecast Accuracy ◽  
Data Availability ◽  
Management Forecasts ◽  
Composite Measure ◽  
Earnings Announcement ◽  
Post Earnings Announcement Drift ◽  
Management Forecast ◽  
Ex Ante

ABSTRACT I examine the effect of ex ante management forecast accuracy on the post-earnings-announcement drift when management forecasts about next quarter's earnings are bundled with current quarter's earnings announcements. I build a composite measure of ex ante management forecast accuracy that takes into account forecast ability, forecast difficulty, and forecast environment. The results show that the bundled forecasts with higher ex ante accuracy mitigate investors' under-reaction to current earnings and reduce the magnitude of the post-earnings-announcement drift. Data Availability: The data used in this paper are available from the sources listed in the text.

Management Forecast Accuracy and CEO Turnover

2012 ◽  
Vol 87 (6) ◽  
pp. 2095-2122 ◽  
Author(s):  
Sam (Sunghan) Lee ◽  
Steven R. Matsunaga ◽  
Chul W. Park
Keyword(s):  
Firm Performance ◽  
Boards Of Directors ◽  
Forecast Accuracy ◽  
Ceo Turnover ◽  
Forecast Errors ◽  
Positive Relation ◽  
Managerial Ability ◽  
Management Forecast ◽  
Future Events ◽  
The Absolute

ABSTRACT 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.

Benefits of management disclosure precision on analysts’ forecasts

2014 ◽  
Vol 13 (4) ◽  
pp. 371-399 ◽  
Author(s):  
Yu-Ho Chi ◽  
David A. Ziebart
Keyword(s):  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Forecast Errors ◽  
Management Earnings Forecasts ◽  
Earnings Guidance ◽  
Short Term ◽  
Content Type ◽  
Management Forecast ◽  
Forecast Precision ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of management’s choice of forecast precision on the subsequent dispersion and accuracy of analysts’ earnings forecasts. Design/methodology/approach – Using a sample of 3,584 yearly management earnings per share (EPS) forecasts and 10,287 quarterly management EPS forecasts made during the period of 2002-2007 and collected from the First Call database, the authors controlled for factors previously found to impact analysts’ forecast accuracy and dispersion and investigate the link between management forecast precision and attributes of the analysts’ forecasts. Findings – Results provide empirical evidence that managements’ disclosure precision has a statistically significant impact on both the dispersion and the accuracy of subsequent analysts’ forecasts. It was found that the dispersion in analysts’ forecasts is negatively related to the management forecast precision. In other words, a precise management forecast is associated with a smaller dispersion in the subsequent analysts’ forecasts. Evidence consistent with accuracy in subsequent analysts’ forecasts being positively associated with the precision in the management forecast was also found. When the present analysis focuses on range forecasts provided by management, it was found that lower precision (a larger range) is associated with a larger dispersion among analysts and larger forecast errors. Practical implications – Evidence suggests a consistency in inferences across both annual and quarterly earnings forecasts by management. Accordingly, recent calls to eliminate earnings guidance through short-term quarterly management forecasts may have failed to consider the linkage between the attributes (precision) of those forecasts and the dispersion and accuracy in subsequent analysts’ forecasts. Originality/value – This study contributes to the literature on both management earnings forecasts and analysts’ earnings forecasts. The results assist in policy deliberations related to calls to eliminate short-term management earnings guidance.

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