MANAGEMENT INCENTIVES TO REPORT FORECASTS OF CORPORATE EARNINGS.
Item
-
Title
-
MANAGEMENT INCENTIVES TO REPORT FORECASTS OF CORPORATE EARNINGS.
-
Identifier
-
AAI8601644
-
identifier
-
8601644
-
Creator
-
GABER, MOHAMED KHAIRAT ABDEL-GELIL.
-
Contributor
-
William Ruland
-
Date
-
1985
-
Language
-
English
-
Publisher
-
City University of New York.
-
Subject
-
Business Administration, Accounting
-
Abstract
-
The major objective of this study is to develop and test motivating factors which can predict or explain management decisions to report forecasts of corporate earnings, to choose the time for forecast disclosure, and the forecast frequency. In addition, the study examines the financial profile of firms that issued forecasts before and those that issued forecasts after the SEC's safe harbor rule.;Agency and signalling theories were used to derive some relevant factors to explain different choices available to management. The degree of stability in earnings streams; systematic market risk; the degree of divergence in interests among the related parties; the management ownership structure; and earnings performance expectations were used to explain management reporting decisions.;The sample includes 442 forecasts produced by 252 firms. Each of these firms was matched with a non-forecast firm in the same four-digit industry code. The joint effect of the independent variables was detected by using both Multiple Discriminant Analysis and Probit Analysis.;The results of both multivariate models are identical and support the hypothesized relationships between the motivating factors and each of the management choices. The results show that forecast reporting is positively associated with firm size, management ownership, and expected economic performance. In addition, the coefficient of variation in earnings and the systematic market risk are negatively associated with forecast reporting.;The results also reveal that forecast horizon choice is positively associated with earnings performance and firm size. Moreover, earnings variability and systematic market risk are negatively correlated with the choice of forecast horizons.;Forecast frequency choice was tested using both MDA and PA. The results indicate that managers of firms with higher earnings variability are less likely to repeat forecasts. Furthermore, earnings performance and firm size show positive association with the frequency of forecasts.;Finally, the results cannot confirm that the SEC's safe harbor rule encourages a different class of firms to publish their forecasts. Results obtained from MDA and PA show that the overall models are not significant and that the financial profile of forecast firms before and issuance of the safe harbor rule does not differ significantly from that of firms issuing forecasts after the rule.
-
Type
-
dissertation
-
Source
-
PQT Legacy CUNY.xlsx
-
degree
-
Ph.D.
-
Program
-
Business Administration
