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The Impact Of Economic Fluctuations On Earnings Forecasts

Author

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  • Ronald A. Stunda

Abstract

Prior studies in the area of management forecasts contain a common characteristic, they make no distinction as to the economic cycle of the U.S. when assessing voluntary earnings disclosures. This research tests whether voluntary earnings disclosures released during periods of an economic downturn differ from disclosures released during periods of economic expansion. In terms of bias and information content, findings suggest that forecasts tend to significantly differ during these distinctly different periods. With the U.S. in the grip of what may be a protracted recessionary period, these findings have practical and important implications for users and disseminators of forecast information.

Suggested Citation

  • Ronald A. Stunda, 2013. "The Impact Of Economic Fluctuations On Earnings Forecasts," Accounting & Taxation, The Institute for Business and Finance Research, vol. 5(2), pages 55-64.
    • Handle: RePEc:ibf:acttax:v:5:y:2013:i:2:p:55-64
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    References listed on IDEAS

    as
    1. John Weeks, 2009. "The Impact of the Global Financial Crisis on The Economy of Sierra Leone," Research Report 18, International Policy Centre for Inclusive Growth.
    2. Michael Clement & Richard Frankel & Jeffrey Miller, 2003. "Confirming Management Earnings Forecasts, Earnings Uncertainty, and Stock Returns," Journal of Accounting Research, Wiley Blackwell, vol. 41(4), pages 653-679, September.
    3. Campello, Murillo & Graham, John R. & Harvey, Campbell R., 2010. "The real effects of financial constraints: Evidence from a financial crisis," Journal of Financial Economics, Elsevier, vol. 97(3), pages 470-487, September.
    4. Jamal Ibrahim Haidar, 2012. "Sovereign Credit Risk in the Eurozone," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 13(1), pages 123-136, January.
    5. Kuo, Jing-Ming & Ning, Lutao & Song, Xiaoqi, 2014. "The Real and Accrual-based Earnings Management Behaviors: Evidence from the Split Share Structure Reform in China," The International Journal of Accounting, Elsevier, vol. 49(1), pages 101-136.
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    More about this item

    Keywords

    Accounting; Forecasts; Security Markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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