When is Managers' Earnings Guidance Most Influential?

Abstract

This paper examines the influence of managers' earnings guidance on analysts and investors. Specifically, we analyze whether certain firm characteristics affect how successful management earnings forecasts are at influencing analysts' earnings estimates. We also analyze whether managers' varying degrees of influence with analysts has implications for the relative accuracy of these two groups in predicting earnings. Lastly, we attempt to provide some evidence on how investors utilize managers' earnings guidance as well as analysts' earnings estimates in setting stock prices.