Work

Earnings management, forecast guidance and the banking crisis

Year: 2013

Type: article

Abstract: This paper studies earnings management and forecast guidance activities of European banks between 2004 and 2008. Using 22,564 analyst forecasts for 55 banks we find that the proportion of banks hitting or beating analyst consensus fell from 68.22% pre-crisis to 28.13% during the crisis. Banks enjoy higher CARs when they hit analyst consensus only in the crisis. Earnings management is evident pre- but not during the crisis – it has no CAR effects. Forecast guidance increases the probability of hitting benchmark earnings and during the crisis yields higher CARs. Earnings management and forecast guidance act as complements in the crisis period.

Source: European Journal of Finance

DOI: 10.1080/1351847x.2013.809548

Authors: Elena Beccalli, Saverio Bozzolan, Andrea Menini, Philip Molyneux

Institutions: Università Cattolica del Sacro Cuore, London School of Economics and Political Science, University of Padua, Bangor University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1992987535

FWCI: 1.497

Cites: 78

Cited by: 16

Related to: 10