Work

Is Silence Golden? An Empirical Analysis of Firms that Stop Giving Quarterly Earnings Guidance in the post Regulation-FD period

Year: 2005

Type: preprint

Abstract: We investigate a sample of 75 firms that publicly renounced quarterly EPS guidance in the post-FD period (10/2000 to 10/2004). We find that stoppers have poor trailing earnings and stock return performance. We document an average -3.8% three-day return around the announcement to stop guidance and such reaction is associated with poor future performance and an increase in systematic risk. After the elimination of guidance, stock prices lead earnings less but there is no change in overall stock return volatility or analyst following. However, analyst forecast dispersion increases and forecast accuracy decreases following firms' decision to stop guiding.

Source: SSRN Electronic Journal

Authors: Shuping Chen, Dawn A. Matsumoto, Shivaram Rajgopal

Institutions: The University of Texas at Austin, University of Washington, Columbia University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W77226366

Cites: 30

Cited by: 16

Related to: 10