Publication Type

Journal Article

Version

publishedVersion

Publication Date

12-2021

Abstract

Bundling managerial earnings guidance with quarterly earnings announcements (EAs) has become an increasingly common practice. This study investigates the impact of bundled guidance on analysts' forecast revisions. Our findings indicate that analysts respond more to bundled guidance than non-bundled guidance. This effect increases with analysts' time pressure and cognitive constraints around the EA. Analysts' revisions also incorporate more of the bundled management guidance when accompanied by additional information, such as conference calls. We further find that analysts revise their forecasts more quickly following bundled guidance than non-bundled guidance. Together, these findings are consistent with the notion that analysts place more weight on bundled guidance than on non-bundled guidance in their forecast revisions as bundled guidance facilities analysts' timely forecast revisions following EAs. Finally, we find that analysts' forecast revisions following bundled guidance generate significant market reactions. Our findings enhance our understanding of analysts' information processing and shed light on why bundling can be an effective guidance strategy.

Keywords

bundled guidance, management forecast, analyst forecast, earnings announcement, timely forecast, information processing

Discipline

Accounting | Portfolio and Security Analysis

Research Areas

Corporate Reporting and Disclosure

Publication

Contemporary Accounting Research

Volume

38

Issue

4

First Page

3146

Last Page

3181

ISSN

0823-9150

Identifier

10.1111/1911-3846.12686

Publisher

Canadian Academic Accounting Association

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Additional URL

https://doi.org/10.1111/1911-3846.12686

Download

Share

COinS