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The Incidence Of Expectations Management In The Post-Regulation Fair Disclosure Period

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  • Sherry Fang Li

Abstract

This paper investigates the incidence of expectations management in the post-Regulation Fair Disclosure period. Using uniquely hand-collected data, I present direct evidence that the expectations management game is still played in the new regulatory environment. Management has switched to issuing pessimistic public guidance (instead of relying on private communications as in the pre-Regulation Fair Disclosure period) to dampen analysts’ expectations to a beatable level. In addition, they use both quantitative and qualitative, both earnings-related and nonearnings-related disclosures to influence analysts’ forecasts. However, I find that expectations management is decreasing during my sample period (2001-2004).

Suggested Citation

  • Sherry Fang Li, 2023. "The Incidence Of Expectations Management In The Post-Regulation Fair Disclosure Period," Accounting & Taxation, The Institute for Business and Finance Research, vol. 15(1), pages 105-116.
    • Handle: RePEc:ibf:acttax:v:15:y:2023:i:1:p105-116:
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    References listed on IDEAS

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    5. Ron Kasznik & Maureen F. McNichols, 2002. "Does Meeting Earnings Expectations Matter? Evidence from Analyst Forecast Revisions and Share Prices," Journal of Accounting Research, Wiley Blackwell, vol. 40(3), pages 727-759, June.
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    More about this item

    Keywords

    Expectations Management; Earnings Guidance; Managerial Guidance; Regulation FD; Analysts’ Expectations;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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