Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086960 | Journal of Accounting and Economics | 2009 | 16 Pages |
Abstract
We investigate the empirical relation between a firm's accounting conservatism and management's issuance of quantitative earnings forecasts. Using three measures of conservatism from prior literature, along with two aggregate measures, we find a negative association between conservatism and the frequency, specificity, and timeliness of management forecasts. The results are robust to estimating the regression in changes, using firm fixed-effects, and using a two-stage instrumental variables approach. Overall, these results suggest that accounting conservatism acts as a substitute for management forecasts by decreasing information asymmetry in the market and reducing potential litigation through the timely reporting of bad news.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Kai Wai Hui, Steve Matsunaga, Dale Morse,