Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance

Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance We investigate firms that stop providing earnings guidance (“stoppers”) either by publicly announcing their decision (“announcers”) or doing so quietly (“quiet stoppers”). Relative to firms that continue guiding, stoppers have poorer prior performance, more uncertain operating environments, and fewer informed investors. Announcers commit to non-disclosure because they (i) do not expect to report future good news or (ii) have lower incentives to guide due to the presence of long-term investors. The three-day return around the announcement is negative. Stoppers subsequently experience increases in analyst forecast dispersion and decreases in forecast accuracy but no change in return volatility or analyst following. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance

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Publisher
Elsevier
Copyright
Copyright © 2010 Elsevier B.V.
ISSN
0165-4101
D.O.I.
10.1016/j.jacceco.2010.10.006
Publisher site
See Article on Publisher Site

Abstract

We investigate firms that stop providing earnings guidance (“stoppers”) either by publicly announcing their decision (“announcers”) or doing so quietly (“quiet stoppers”). Relative to firms that continue guiding, stoppers have poorer prior performance, more uncertain operating environments, and fewer informed investors. Announcers commit to non-disclosure because they (i) do not expect to report future good news or (ii) have lower incentives to guide due to the presence of long-term investors. The three-day return around the announcement is negative. Stoppers subsequently experience increases in analyst forecast dispersion and decreases in forecast accuracy but no change in return volatility or analyst following.

Journal

Journal of Accounting and EconomicsElsevier

Published: Feb 1, 2011

References

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