Does Stopping Quarterly Earnings Guidance Benefit a Firm and Investors in the Long Term?

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Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2019

Department

Rahoituksen laitos

Major/Subject

Mcode

Degree programme

Finance

Language

en

Pages

66 + 4

Series

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.

Description

Thesis advisor

Nyberg, Peter

Keywords

quarterly earnings guidance, short-termism, earnings management, long-term value creation, managerial myopia

Other note

Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-201906023277

Collections

[gradu] Kauppakorkeakoulu / BIZ