SEC Chairman Arthur Levitt has recently expressed concerns about the use of earnings management to meet Wall Street earnings expectations set by analysts’ forecasts. We investigate whether managers aim to “meet or beat” analysts’ forecasts and examine the influence of analysts’ forecast dispersion on this aim. Our results are consistent with managers aligning earnings with market expectations established by analysts’ forecasts. Additionally, our evidence is consistent with managers behaving as though they have greater incentives to increase income in settings where the dispersion in analysts’ forecasts is low.
|Number of pages||22|
|Journal||Journal of Accounting, Auditing and Finance|
|State||Published - Oct 2000|
ASJC Scopus subject areas
- Economics, Econometrics and Finance (miscellaneous)