Publication Type

Journal Article

Version

acceptedVersion

Publication Date

9-2023

Abstract

This paper investigates whether the use of Big Data analytics by firms has a spillover effect on management forecasting behavior. Insights provided by Big Data could potentially improve firms’ ability to forecast earnings (supply channel) and investor demand for earnings information is likely higher for firms engaging in data analytics (demand channel). Using a text-based measure of firms’ commitments to and usage of Big Data analytics, we find that Big Data analytics usage is positively associated with the propensity to issue management earnings forecasts. Consistent with the “supply channel” explanation, we find that Big Data analytics usage is positively associated with management forecast accuracy as well. Also, supporting the “demand channel” explanation, we find that Big Data analytics usage is associated with greater analyst following. Our findings of improved disclosure following commitments to Big Data analytics highlight a potentially unintended benefit of the Big Data revolution.

Keywords

Big data, data analytics, management forecasts, voluntary disclosure

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Accounting Horizons

First Page

1

Last Page

18

ISSN

0888-7993

Identifier

10.2308/HORIZONS-2020-145

Publisher

American Accounting Association

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2308/HORIZONS-2020-145

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