OneAmerica Professor of Accounting
The usefulness of voluntary management earnings forecasts
The major thrust of my research relates to management’s voluntary disclosure of information to investors and creditors. Much disclosure is mandated by the Securities and Exchange Commission and the Financial Accounting Standards Board. However, companies routinely disclose additional information about its operations. Why companies would do so when it might reveal proprietary information to competitors has been the subject of a stream of research in the accounting literature. In a stream of research over 20 years, I (along with my co-author, Steve Baginski at the University of Georgia), have investigated how information contained in voluntary earnings forecasts (annual and quarterly) affects stock prices. We have learned that stock prices react in predictable ways to the timing of the forecast within the period, the form of the forecast (point, range, maximum, minimum, open-ended), and the types of attributions contained (external and internal). Our work is part of a larger body of work that relates to how information affects stock prices. Management could use our findings (along with the findings of other researchers) to craft management earnings forecasts, and invetors can use our work in assessing management earnings forecasts.