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Does stopping quarterly earnings guidance benefit a firm and investors in the long term?
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School of Business |
Master's thesis
Electronic archive copy is available via Aalto Thesis Database.
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en
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66 + 4
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Abstract
I investigate the long-term stock performance and operational performance growth of firms that publicly announce the cessation of their practice of issuing quarterly earnings guidance. I find no significant development in stock price or operational performance growth in the post-cessation period relative to the pre-cessation period. The reason for these results seems to be that the biggest reason for firms to cease quarterly earnings guidance is poor performance. When I control for the different reasons that firms have for giving up quarterly earnings guidance, I find that the stock price and change in operational performance improve significantly in the post-cessation period.