Capital Market Consequences of Managers' Voluntary Disclosure Styles

• Main Author: YANG, Holly I.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Management credibility; Earnings guidance; Management forecasts; Management styles; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1159; https://ink.library.smu.edu.sg/context/soa_research/article/2158/viewcontent/SSRN_id1691394.pdf
• Institution: Singapore Management University

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.