Management of Earnings and Analysts' Forecasts to Achieve Zero and Small Positive Earnings Surprises

By D. Burgstahler, Michael Eames. 2006

669 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/9868e4f8a751c642a121f78d980bb2f74e87a26f

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Martin Walker
2. Shivaram Rajgopal
3. Vasiliki Athanasakou
4. William J. Mayew
5. Norman Strong
6. Mark T. Soliman
7. Amy P. Hutton
8. Richard M. Frankel

In Finance

1. Martin Walker
2. Shivaram Rajgopal
3. William J. Mayew
4. Vasiliki Athanasakou
5. Amy P. Hutton
6. Beatriz García Osma
7. Richard M. Frankel
8. Brossa Wong

In Strategy and Management

1. Martin Walker
2. Vasiliki Athanasakou
3. Norman Strong
4. Mark T. Soliman
5. Shivaram Rajgopal
6. Richard M. Frankel
7. Hassan Tehranian
8. Barbara A. Lougee

Citations in the corpus

• Cash Flow Duration and the Term Structure of Equity Returns (2018, neutral): “Research in accounting associates earnings that just meet analyst forecasts with earnings management (see Skinner and Sloan (2002) and Burgstahler and Eames (2006)).”
• Do Managers Define Non-GAAP Earnings to Meet or Beat Analyst Forecasts? (2013, background): “Cheong and Thomas (2011) and Ball (2011) provide evidence that the magnitude of the firm’s earnings surprise, using the consensus analyst forecast, does not vary as a function of the scalar.”
• Corporate Governance and Earnings Management: A Survey of Literature (2013, background): “Some studies find that management appears to manage earnings to prevent earnings from falling below analysts’ forecasts (Burgstahler and Eames, 1998; Kasznik, 1999; Matsumoto, 2002; Burgstahler and Eames, 2006).”
• Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management? (2008, neutral): “Previous research on financial reporting quality has focused on earnings management [e.g. Burgstahler and Eames, 2006] and fraud [e.g. Rezaee, 2005].”
• R&D Expenditure and Earnings Targets (2009, positive): “First, prior research suggests that forecasts formed late in the reporting cycle represent the key targets against which reported earnings performance is assessed (Kasznik and McNichols, 2002; Burgstahler and Eames, 2006).”
• Seasoned Equity Offerings: Quality of Accounting Information and Expected Flotation Costs (2009, positive): “In addition, several studies (Payne, Robb, and Payne, 2000; Burgstahler and Eames, 2006) uncover evidence of earnings management by managers seeking to meet analysts’ earnings forecasts.”
• Discretionary Revenues as a Measure of Earnings Management (2010, result): “Burgstahler and Eames (2006) find that firms with small positive forecast errors have higher unexpected accruals using the Jones (1991) model, in contrast to the absence of such an association in Phillips et al.”
• The relation between earnings management and financial statement fraud (2011, background): “While there are incremental benefits associated with exceeding forecasts, managers prefer to just meet analyst forecasts because the costs of earnings management also increase when forecasts are exceeded (Burgstahler & Eames, 2006).”
• Psychological Pathways to Fraud: Understanding and Preventing Fraud in Organizations (2011, background): “Burgstahler and Eames (2006) document how analysts’ earnings forecasts impact financial reporting.”
• Audit Quality and the Trade-Off between Accretive Stock Repurchases and Accrual-Based Earnings Management (2012, background): “Payne and Robb (2000) show that managers use accruals to manipulate EPS to meet or beat analysts’ forecasts when forecast dispersion is low and Burgstahler and Eames (2006) document that managers meet or beat EPS forecasts through both accrual-based earnings management and expectations management.”
• Do pennies matter? Investor relations consequences of small negative earnings surprises (2010, background): “9 A story underlying the asymmetric penalty for small misses is the notion that the cost of managing earnings increases in the amount of earnings that must be managed (Burgstahler and Eames, 2006).”