When is Earnings Guidance a Treacherous Servant?

Bibliographic Details
Main Author:	King, Thomas A.
Language:	English
Published:	Case Western Reserve University Doctor of Management / OhioLINK 2016
Subjects:	Finance Management earnings guidance earnings management mixed method research
Online Access:	http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655

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spelling	ndltd-OhioLink-oai-etd.ohiolink.edu-casedm16365659252906552021-11-12T05:18:19Z When is Earnings Guidance a Treacherous Servant? King, Thomas A. Finance Management earnings guidance earnings management mixed method research Following Enron-era accounting scandals, practitioners warn that earnings guidance (management expects the firm to report between $0.95 and $1.05 per share) invites dysfunctional levels of earnings management as managers scramble to achieve previously announced targets. Scholars, by contrast, offer evidence that earnings guidance improves financial reporting by constraining earnings management. This paper contributes to the discussion by integrating a qualitative study based on interviews with 31 financial executives and a quantitative study involving structural equation modeling of responses to a survey completed by 344 managers.The primary finding is that guidance constrains earnings management, aiding the financial reporting processes. However, the presence of earnings per share projections, a particular form of earning guidance, given in the context of an active investor relations program is associated with a higher propensity to manage earnings. Such disclosure is a specific case of high-stakes earnings guidance, defined as sharing projections that bring embarrassment or punishment should actual performance differ from executive prediction. The author proposes a model of earnings guidance and offers three propositions derived from the model. 2016 English text Case Western Reserve University Doctor of Management / OhioLINK http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655 http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655 unrestricted This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws.
collection	NDLTD
language	English
sources	NDLTD
topic	Finance Management earnings guidance earnings management mixed method research
spellingShingle	Finance Management earnings guidance earnings management mixed method research King, Thomas A. When is Earnings Guidance a Treacherous Servant?
author	King, Thomas A.
author_facet	King, Thomas A.
author_sort	King, Thomas A.
title	When is Earnings Guidance a Treacherous Servant?
title_short	When is Earnings Guidance a Treacherous Servant?
title_full	When is Earnings Guidance a Treacherous Servant?
title_fullStr	When is Earnings Guidance a Treacherous Servant?
title_full_unstemmed	When is Earnings Guidance a Treacherous Servant?
title_sort	when is earnings guidance a treacherous servant?
publisher	Case Western Reserve University Doctor of Management / OhioLINK
publishDate	2016
url	http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655
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When is Earnings Guidance a Treacherous Servant?

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