The Impact of Related Party Sales by Listed Chinese Firms on Earnings Informativeness and Earnings Forecasts

2007 ◽  
Author(s):  
Joseph Aharony ◽  
Jiwei Wang ◽  
Hongqi Yuan
Keyword(s):  
Earnings Forecasts ◽  
Chinese Firms ◽  
Earnings Informativeness ◽  
The Impact

scholarly journals The impact of litigation risk on corporate prospective disclosure: A review of the empirical literature

2012 ◽  
Vol 10 (1) ◽  
pp. 53-61 ◽  
Author(s):  
Gerry Gallery ◽  
Jodie Nelson ◽  
Chan Guo
Keyword(s):  
Earnings Forecasts ◽  
Empirical Literature ◽  
Future Research ◽  
Litigation Risk ◽  
Management Earnings Forecasts ◽  
Differential Impact ◽  
Disclosure Decisions ◽  
Secondary Factor ◽  
External Governance ◽  
The Impact

We review the literature on the impact of litigation risk (a form of external governance) on corporate prospective disclosure decisions as reflected in management earnings forecasts. From this analysis we identify four key areas for future research. First, litigation risk warrants more attention from researchers; currently it tends to be treated as a secondary factor impacting MEF decisions. Second, it would be informative from a governance perspective for researchers to explore why litigation risk has a differential impact on MEF decisions across countries. Third, understanding the interaction between litigation risk and forecast/firm-specific characteristics is important from management, investor and regulatory perspectives but is currently under-explored Last, research on the litigation risk and MEF attributes link is piecemeal and incomplete, requiring more integrated and expanded analysis.

Discussion: “Dispersion in Analysts' Earnings Forecasts as a Measure of Uncertainty”

1998 ◽  
Vol 13 (3) ◽  
pp. 271-274 ◽  
Author(s):  
Lawrence D. Brown
Keyword(s):  
Stock Price ◽  
Annual Report ◽  
Earnings Forecasts ◽  
Analyst Forecast ◽  
Earnings Forecast ◽  
Data Set ◽  
Forecast Dispersion ◽  
Forecast Revision ◽  
Analyst Earnings ◽  
The Impact

This paper tackles an interesting question; namely, whether dispersion in analysts' earnings forecasts reflects uncertainty about firms' future economic performance. It improves on the extant literature in three ways. First, it uses detailed analyst earnings forecast data to estimate analyst forecast dispersion and revision. The contrasting evidence of Morse, Stephan, and Stice (1991) and Brown and Han (1992), who respectively used consensus and detailed analyst data to examine the impact of earnings announcements on forecast dispersion, suggest that detailed data are preferable for determining the data set on which analysts' forecasts are conditioned. Second, it relates forecast dispersion to both analyst earnings forecast revision and stock price reaction to the subsequent earnings announcement. Previous studies related forecast dispersion to either analyst forecast revision (e.g., Stickel 1989) or to subsequent stock price movements (e.g., Daley et al. [1988]), but not to both revision and returns. Third, it includes the interim quarters along with the annual report. In contrast, previous research focused on the annual report, ignoring the interims (Daley et al. [1988]).

CEO career concerns and expectations management

2019 ◽  
Vol 20 (3) ◽  
pp. 267-289
Author(s):  
Elio Alfonso ◽  
Li-Zheng Brooks ◽  
Andrey Simonov ◽  
Joseph H. Zhang
Keyword(s):  
Earnings Forecasts ◽  
Early Career ◽  
Career Concerns ◽  
Career Stages ◽  
Career Stage ◽  
Content Type ◽  
Expectations Management ◽  
Reputational Capital ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine the impact of career concerns on CEOs’ use of expectations management to meet or beat analysts’ quarterly earnings forecasts. The authors posit that early career-stage CEOs are less (more) likely to use expectations management than are late career-stage CEOs if the market views expectations management as an opportunistic strategy (efficient process) due to reputational capital concerns. Design/methodology/approach The authors obtain data for CEO career stages and CEO compensation from ExecuComp, analyst earnings forecasts from the detailed I/B/E/S database, financial statement data from quarterly Compustat and stock returns from the daily CRSP database over the period 1992–2013. Findings The results are consistent with the opportunistic hypothesis and early-stage CEOs seeking to build reputational capital by avoiding the perception of engaging in an inefficient managerial strategy. The authors find robust evidence that late career-stage CEOs are more likely to engage in expectations management than early career-stage CEOs. Furthermore, the authors show that late career-stage CEOs tend to employ expectations management to boost the value of their equity-based compensation. Research limitations/implications The findings have important implications because the authors document a different implication of the “horizon problem” related to CEOs’ opportunistic forecasting behavior and the manipulation of analysts’ forecasts for CEOs who are approaching retirement. Practical implications The results have practical implications for analysts who provide earnings forecasts for firms whose CEOs are in early or late career stages and for investors who use such analysts’ forecasts in firm valuation models. Originality/value The authors contribute to the literature on expectations management by documenting how reputational incentives of CEOs affect the likelihood that managers engage in expectations management. The authors show that an important managerial incentive to engage in expectations management is CEO career concerns. Furthermore, the authors show that CEOs who are in early stages of their careers choose not to engage in expectations management due to the market’s perceived degree of opportunism pertaining to this strategy.

The impact of the Sarbanes–Oxley Section 404(b) exemption on earnings informativeness

2019 ◽  
Vol 24 (1) ◽  
pp. 3-23
Author(s):  
Alexey Lyubimov ◽  
Larry Davis ◽  
Greg Trompeter
Keyword(s):  
Section 404 ◽  
Earnings Informativeness ◽  
Sarbanes Oxley ◽  
The Impact

Sustainable supply chain management practices and performance

2018 ◽  
Vol 118 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Jing Wang ◽  
Jun Dai
Keyword(s):  
Economic Performance ◽  
Environmental Performance ◽  
Social Performance ◽  
Performance Model ◽  
Sustainable Supply Chain ◽  
Chinese Firms ◽  
Chain Management ◽  
Content Type ◽  
And Performance ◽  
The Impact

Purpose The purpose of this paper is to contribute significantly to the empirical investigations related to the impact of sustainable supply chain management (SSCM) practices on performance in Chinese firms. The paper also aims to theorize and empirically assess a comprehensive SSCM practices and performance model. The model incorporates two aspects of SSCM practices: internal and external management, and analyses the impact on corporate sustainability performance from all dimensions. Design/methodology/approach This paper develops a conceptual model to investigate the impact of SSCM practices on the firm performance. Based on the data of 172 Chinese firms, this paper analyzes the impact of SSCM practices on firm economic performance, environmental performance, and social performance for each dimension by using PLS structural equation methods. Findings The results show that firm’s internal SSCM practices have a positive impact on firm’s environmental performance and social performance. Moreover, environmental performance and social performance are positively related to economic performance. Originality/value A comprehensive SSCM practices performance model is proposed and empirically assessed for Chinese firms. The results of this investigation support the hypotheses that SSCM practices are environmentally and socially necessary and are favorable for business. A series of approach and implications of SSCM practices is recommended.

The Impact of Financial Covenants in Private Loan Contracts on Classification Shifting

2019 ◽  
Vol 65 (8) ◽  
pp. 3637-3653 ◽  
Author(s):  
Yun Fan ◽  
Wayne B. Thomas ◽  
Xiaoou Yu
Keyword(s):  
Earnings Forecasts ◽  
Management Technique ◽  
Loan Contracts ◽  
Special Items ◽  
Classification Shifting ◽  
Distressed Firms ◽  
Debt Covenant ◽  
The Impact ◽  
Covenant Violations ◽  
Private Loan

This study examines whether firms with private loan contracts that contain debt covenants based on earnings before interest, taxes, depreciation, and amortization (EBITDA) are more likely to misclassify core expenses as special items (i.e., classification shift). Misclassifying core expenses as income-decreasing special items allows the firm to increase EBITDA and thereby potentially avoid debt covenant violations. Consistent with our expectation, firms misclassify core expenses as special items when at least one EBITDA-related financial covenant is close to being violated. In addition, classification shifting is more prominent when financially distressed firms are close to violating at least one EBITDA-related covenant. Whereas prior research on classification shifting focuses primarily on equity market incentives (e.g., meeting analysts’ earnings forecasts), our study extends this research to private loan contracts to highlight that creditors also affect classification shifting. Classification shifting appears to be an additional earnings management technique used by managers to avoid debt covenant violations. This paper was accepted by Shivaram Rajgopal, accounting.

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