Quarterly earnings thresholds: Making the case for prior quarter earnings
- 주제(키워드) 도움말 analysts' forecasts , capital markets , earnings benchmarks , earnings management , earnings response coefficient , earnings thresholds , information environment , seasonal earnings , temporal changes
- 발행기관 WILEY
- 발행년도 2021
- 총서유형 Journal
- 본문언어 영어
초록/요약 도움말
We provide evidence that the prior quarter earnings number is an important and informative benchmark that is relatively unexplored in the accounting literature. Our analyses suggest that managers appear to avoid negative earnings changes relative to the prior quarter. Moreover, we find that even after controlling for the information contained in other frequently used benchmarks (i.e., analysts' forecasts and earnings from the same quarter of the prior year), changes over the prior quarter's earnings are associated with stock returns. We find that this result is stronger post-Regulation FD and XBRL, perhaps as a result of the improved information environment. We also find that the informativeness of prior quarter earnings is greater for firms with less volatile earnings and that meeting-or-beating prior quarter earnings are associated with future performance.
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