کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
981989 | 1480439 | 2016 | 15 صفحه PDF | دانلود رایگان |
• Determine how market uncertainty affects management guidance perception and behavior.
• More market uncertainty—more negative share price response to negative guidance.
• More market uncertainty—lower likelihood of negative management guidance issue.
• Market uncertainty has asymmetric effects on guidance perception and behavior.
• Findings support the ambiguity based pricing theories.
We test a theory about ambiguity surrounding the distribution of fundamental values to determine how market uncertainty affects earnings guidance perception and behavior. We find a more pronounced negative share price response to negative earnings guidance and a lower likelihood that management issues negative guidance under conditions of greater market uncertainty. Yet, we also find that the share price response to positive guidance is not related to the level of market uncertainty, while the likelihood of issuing positive guidance decreases with market uncertainty. The asymmetric effects of market uncertainty on earnings guidance perception and behavior support the ambiguity based pricing theories.
Journal: The Quarterly Review of Economics and Finance - Volume 61, August 2016, Pages 97–111