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Managerial tools used to meet or beat analyst forecasts: Evidence from the UK

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  • Al Mabsali, Yousuf Khamis
  • Hayward, Robert
  • Eliwa, Yasser

Abstract

This paper examines the tools that managers use to meet or beat analyst forecasts in the post-International Financial Reporting Standards (IFRS) period, using a sample of UK firms for the period 2005 to 2015. Our results are consistent with the view that managers utilize both classification shifting and managerial guidance to hit analyst forecasts. The results suggest that managers are more likely to continue to exercise their discretion in using these two tools following the adoption of IFRS. This paper supports the argument that managers engage in classification shifting, and IFRS adoption is more likely to increase market demand for more disclosuresthrough managerial guidance. In contrast, there is weak evidence to suggest that real earnings management or accrual earnings management are used to hit analyst forecasts. Our results are expected to be of interest to policymakers, regulators, and external auditors.

Suggested Citation

  • Al Mabsali, Yousuf Khamis & Hayward, Robert & Eliwa, Yasser, 2021. "Managerial tools used to meet or beat analyst forecasts: Evidence from the UK," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:jiaata:v:43:y:2021:i:c:s1061951821000082
    DOI: 10.1016/j.intaccaudtax.2021.100383
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    More about this item

    Keywords

    Earnings management; Managerial tools; Hitting analyst forecasts; Managerial guidance;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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