Capital Market Consequences of Managers' Voluntary Disclosure Styles

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Accounting Papers
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management credibility
earnings guidance
management forecasts
management styles
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Yang, Holly I
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This paper studies the capital market consequences of managers establishing an individual forecasting style. Using a manager-firm matched panel dataset, I examine whether and when manager-specific credibility matters. If managers' forecasting styles affect their perceived credibility, then the stock price reaction to forecast news should increase with managers' prior forecasting accuracy. Consistent with this prediction, I find that the stock price reaction to management forecast news is stronger when information uncertainty is high and when the manager has a history of issuing more accurate forecasts, indicating that individual managers benefit from establishing a personal disclosure reputation.

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2012-01-01
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Journal of Accounting and Economics
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