Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086906 | Journal of Accounting and Economics | 2010 | 20 Pages |
Abstract
I investigate whether management earnings forecasts fully reflect the implications of accruals for future earnings. I find that managers overestimate accrual persistence in range forecasts but not in point forecasts and that managers' accrual-related forecast bias in range forecasts increases with forecast range and forecast horizon. My results suggest that managers overestimate accrual persistence when faced with greater difficulty forecasting earnings. Moreover, I find that managers' accrual-related forecast bias in range forecasts is somewhat affected by managerial opportunism and fear of litigation. Finally, I find accrual mispricing for firms issuing range forecasts but not for firms issuing point forecasts.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Weihong Xu,