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The role of corporate governance in meeting or beating analysts' forecast

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  • Adut, Davit
  • Duru, Augustine
  • Galpin, Wendy Liu

Abstract

Meeting or beating analysts' forecasts is a topic of considerable interest in the academic and business communities. Some studies indicate a favorable market response when firms meet or beat analysts' earnings forecasts, but others suggest managers opportunistically manage earnings to achieve earnings targets. We investigate the relation between corporate governance mechanisms and meeting or exceeding analysts' expectations and find that attributes of corporate governance are related to the likelihood of consistently meeting or exceeding consensus forecasts. We extend current literature by showing that some attributes of strong corporate governance mechanisms lower agency costs associated with consistently meeting or beating analysts' expectations. We also find that compensation committees reward managers for consistently meeting or beating analysts' forecasts.

Suggested Citation

  • Adut, Davit & Duru, Augustine & Galpin, Wendy Liu, 2011. "The role of corporate governance in meeting or beating analysts' forecast," Journal of Accounting and Public Policy, Elsevier, vol. 30(2), pages 188-198, March.
    • Handle: RePEc:eee:jappol:v:30:y::i:2:p:188-198
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    Cited by:

    1. Emmanuel Mamatzakis & Anna Bagntasarian, 2021. "The nexus between CEO incentives and analysts' earnings forecasts," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6205-6248, October.
    2. Huang, Wei, 2016. "The use of management forecasts to dampen analysts' expectations by Chinese listed firms," International Review of Financial Analysis, Elsevier, vol. 45(C), pages 263-272.
    3. Anthony C. Ng & Hua Christine Xin & Bikki Jaggi, 2024. "Would Managers Sacrifice Conservative Financial Reporting to Meet/Beat Market Earnings Expectations?," JRFM, MDPI, vol. 17(7), pages 1-33, July.
    4. Wenxia Ge & Jeong-Bon Kim, 2014. "Boards, takeover protection, and real earnings management," Review of Quantitative Finance and Accounting, Springer, vol. 43(4), pages 651-682, November.

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