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King DM 2016 Dissertation.pdf (1.19 MB)

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When is Earnings Guidance a Treacherous Servant?

King, Thomas A.
http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655

Abstract Details

2016, Doctor of Management, Case Western Reserve University, Weatherhead School of Management.
Following Enron-era accounting scandals, practitioners warn that earnings guidance (management expects the firm to report between $0.95 and $1.05 per share) invites dysfunctional levels of earnings management as managers scramble to achieve previously announced targets. Scholars, by contrast, offer evidence that earnings guidance improves financial reporting by constraining earnings management. This paper contributes to the discussion by integrating a qualitative study based on interviews with 31 financial executives and a quantitative study involving structural equation modeling of responses to a survey completed by 344 managers. The primary finding is that guidance constrains earnings management, aiding the financial reporting processes. However, the presence of earnings per share projections, a particular form of earning guidance, given in the context of an active investor relations program is associated with a higher propensity to manage earnings. Such disclosure is a specific case of high-stakes earnings guidance, defined as sharing projections that bring embarrassment or punishment should actual performance differ from executive prediction. The author proposes a model of earnings guidance and offers three propositions derived from the model.
Gary Previts, Ph.D. (Advisor)
117 p.
Finance; Management
earnings guidance; earnings management; mixed method research

Recommended Citations

Citations

  • King, T. A. (2016). When is Earnings Guidance a Treacherous Servant? [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655

    APA Style (7th edition)

  • King, Thomas. When is Earnings Guidance a Treacherous Servant? . 2016. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655.

    MLA Style (8th edition)

  • King, Thomas. "When is Earnings Guidance a Treacherous Servant? ." Doctoral dissertation, Case Western Reserve University, 2016. http://rave.ohiolink.edu/etdc/view?acc_num=casedm1636565925290655

    Chicago Manual of Style (17th edition)

casedm1636565925290655
89
© 2016, all rights reserved.
This open access ETD is published by Case Western Reserve University Doctor of Management and OhioLINK.