Do management earnings forecasts incorporate information in accruals?
Weihong Xu Journal of Accounting and Economics, 2010, vol. 49, issue 3, pages 227-246 Abstract: I investigate whether management earnings forecasts fully reflect the implications of accruals for future earnings. I find that managers overestimate accrual persistence in range forecasts but not in point forecasts and that managers’ accrual-related forecast bias in range forecasts increases with forecast range and forecast horizon. My results suggest that managers overestimate accrual persistence when faced with greater difficulty forecasting earnings. Moreover, I find that managers’ accrual-related forecast bias in range forecasts is somewhat affected by managerial opportunism and fear of litigation. Finally, I find accrual mispricing for firms issuing range forecasts but not for firms issuing point forecasts. Keywords: Accruals; Persistence; Management; forecasts; Forecast; errors (search for similar items in EconPapers) Date: 2010 Track citations by RSS feed Downloads: (external link) h
