Work

The Effect of Analysts' Forecasts on Earnings Management in Financial Institutions

Year: 1998

Type: article

Abstract: I test a market consensus hypothesis about earnings management in the banking industry. This hypothesis states that when analysts have reached a consensus in their earnings forecasts, managers have an incentive to manage earnings through discretionary accruals to achieve market expectations. A sample of banks is partitioned based on the degree of forecaster consensus, and the behavior of one discretionary accrual, the loan loss provision, is predicted for each partition. The results suggest bank managers make greater use of the loan loss provision to manipulate earnings in a discretionary manner when analysts have reached a consensus in their earnings predictions.

Source: The Journal of Financial Research

DOI: 10.1111/j.1475-6803.1998.tb00688.x

Author: Sean W. G. Robb

Institution: Wilfrid Laurier University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1481275059

FWCI: 10.72

Cites: 11

Cited by: 48

Related to: 10