Investors' Reactions to Management Guidance Forms: The Influence of Multiple Benchmarks
Year: 2007
Type: article
Abstract: In this study, we investigate underlying mechanisms for the effects of management guidance forms on investors' judgments. We do so by comparing effects of point and range guidance with those associated with a hybrid management guidance form that combines the attributes of both point and range guidance. With respect to investors' earnings reestimates made after actual earnings announcements, we find that both the number and type of benchmarks associated with the guidance forms matter. High-knowledge investors use both primary (explicitly stated) and secondary (implicitly stated) benchmarks, whereas low-knowledge investors attend only to primary benchmarks. We also find that investors have greater confidence in their earnings estimates when management guidance explicitly provides best estimates.
Source: The Accounting Review
Authors: Jun Han, Hun-Tong Tan
Institutions: University of Hong Kong, Nanyang Technological University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2010850875