Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
983266 | The Quarterly Review of Economics and Finance | 2014 | 10 Pages |
Abstract
•Entrenched managers beat earnings forecast more often in some scenario.•They do so mainly due to the drop in analysts’ consensus.•In the post-SOX era, the results above nearly disappear.
This study investigates the relationship between managerial entrenchment and how firms meet or beat earnings forecasts. It further examines whether this relationship changes before and after the Sarbanes–Oxley Act (SOX). We find that, in the pre-SOX era, entrenched managers meet or exceed analyst forecasts more often than their unentrenched counterparts when analysts’ initial forecasts are high. This is mainly due to the drop in analysts’ consensus rather than earnings management. These results nearly disappear in the post-SOX era.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Weishen Wang, Rachel Graefe-Anderson, Mark K. Pyles, Dongnyoung Kim,