S-Space College of Business Administration/Business School (경영대학/대학원) Dept. of Business Administration (경영학과) Seoul Journal of Business (SJB) Seoul Journal of Business Volume 16, Number 1/2 (2010)
Meeting or Beating Analysts Forecasts: Empirical Evidence of Firms Characteristics, and Persistence Patterns
- Issue Date
- Seoul Journal of Business, Vol.16 No.2, pp. 3-38
- Analysts’ forecasts ; earnings management ; forecast management ; Sarbanes-Oxley Act ; firm characteristics
- Focusing on the MBE (meeting or beating analysts forecast) phenomenon,
this study primarily investigates the way market responds to a firms
repeated MBE and to its first failure to meet analysts forecast after a
long string of MBE. The paper also asks whether the markets reaction to
the MBE patterns has changed after the regulatory reform including the
Sarbanes-Oxley Act and investigates the properties of habitual MBE firms.
The results show the market rewards persistent MBE firms and that it
seems to efficiently interpret a systematic portion of earnings surprise for
habitual beaters. They also document that the post-SOX stock market
premium to MBE has not completely diminished and that MBE patterns are
strongly associated with firm characteristics.