Management's Incentives to Avoid Negative Earnings Surprises

By Dawn A. Matsumoto. 2002

1,479 citations recorded by the source corpus.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/c9f359ae45973f2e91427da8dd8261b26971c2ad

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In Accounting

1. Martin Walker
2. Christian Leuz
3. Qiang Cheng
4. Shivaram Rajgopal
5. Jeong‐Bon Kim
6. Daniel A. Cohen
7. Peter D. Wysocki
8. Sarah E. McVay

In Finance

1. Martin Walker
2. Eric C. So
3. Qiang Cheng
4. I. Wang
5. Daniel A. Cohen
6. Sarah E. McVay
7. Rodrigo S. Verdi
8. Mohan Venkatachalam

Citations in the corpus

• Pricing of Seasoned Equity Offers and Earnings Management (2005, background): “Matsumoto (2002) reports that firms manage earnings to avoid missing expectations at the earnings announcement.”
• Equity Incentives and Earnings Management (2005, positive): “As shown in Matsumoto (2002), it is easier to meet or beat analysts’ forecasts that have been guided downward, so we include a dummy variable to indicate whether analysts’ forecasts are revised downward in the three months before earnings announcements.”
• Trading incentives to meet the analyst forecast (2006, methodology): “We use the measure developed in Matsumoto (2002) to capture forecast guidance.”
• Marching to the Beat of Different Drummers: The Influence of Institutional Owners on Competitive Actions (2010, neutral): “The combination of short time horizons and diversified holdings makes it difficult for transient institutional investors to appropriately value the long-term benefits of firms’ strategic investments (Matsumoto, 2002; Schnatterly, Shaw, & Jennings, 2007).”
• The Effect of Cash Flow Forecasts on Accrual Quality and Benchmark Beating (2011, methodology): “To estimate downward expectations management, we follow the methodology of Matsumoto (2002).”
• Analyst Information Discovery and Interpretation Roles: A Topic Modeling Approach (2018, neutral): “This finding is further consistent with the evidence shown by Matsumoto, Pronk, and Roelofsen (2011) that the information content of”
• Integrated Reporting and Investor Clientele (2015, background): “Similarly, Matsumoto (2002) documents that firms with higher presence of transient investors are more likely to avoid negative earnings surprises through earnings and expectations management.”
• The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps (2011, background): “3For this reason, most research examining commodity hedging has focused on particular industries such as gold mining (Tufano (1996), (1998), Petersen and Thiagarajan (2000), and Brown et al.”
• Loss Function Assumptions in Rational Expectations Tests on Financial Analysts' Earnings Forecasts (2004, neutral): “Brown, 1997, 2001) has led to suggestions that managers now manage earnings to beat forecasts (Matsumoto, 2002) or that analysts’ loss functions have reversed asymmetry.”
• Last‐Chance Earnings Management: Using the Tax Expense to Meet Analysts' Forecasts* (2004, background): “Further, managers attempt to guide analysts’ forecasts (Matsumoto 2002; Schwartz 2003).”
• Does the External Monitoring Effect of Financial Analysts Deter Corporate Fraud in China? (2014, background): “earnings management among firms that just meet or beat analyst earnings forecasts (Matsumoto 2002).”
• Former Audit Partners and Abnormal Accruals (2004, background): “1 For example, see Michaels (2002). Enron is only one of several well-publicized instances of financial reporting problems involving the "revolving door.”
• Accounting Discretion, Corporate Governance, and Firm Performance* (2008, positive): “Consistent with Bowen et al. (1995) and Matsumoto (2002), we conduct a factor analysis of the following three variables to capture stakeholder claims: (i) DDUR if a firm belongs to a durable goods industry; (ii) R&D/Sales and (iii) LABOR intensity (1-property, plant and equipment/total assets).”
• Expectations Management and Beatable Targets: How do Analysts React to Explicit Earnings Guidance? (2006, neutral): “For example, Skinner and Sloan (2002) provide evidence that the stock market severely punishes firms, especially growth firms, that miss an earnings target.”
• Bias in the tone of forward‐looking narratives (2010, background): “A lower profit can lead to a decline in managerial remuneration (Matsunaga and Park, 2001), reduced job security (Puffer and Weintrop, 1991) and a loss in managerial disclosure reputation (Matsumoto, 2002).”