Management of Earnings and Analysts' Forecasts to Achieve Zero and Small Positive Earnings Surprises

Journal of Business Finance and Accounting - Tập 33 Số 5-6 - Trang 633-652 - 2006
David Burgstahler1, Michael Eames1
1The authors are respectively Gerhard G. Mueller Endowed Professor in Accounting at the University of Washington and Associate Professor of Accounting, Santa Clara University.

Tóm tắt

Abstract:  This paper corroborates the finding of prior studies that managers avoid reporting earnings lower than analyst forecasts (i.e., negative earnings surprises) and provides new evidence of actions contributing to this phenomenon. Specifically, we provide empirical evidence of both (1) upward management of reported earnings and (2) downward ‘management’ of analysts' forecasts to achieve zero and small positive earnings surprises. Further analysis of the components of earnings management suggests that both the operating cash flow and discretionary accruals components of earnings are managed.

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Tài liệu tham khảo

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Journal of Business Finance and Accounting

Tập 33 Số 5-6

633-652

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