Intraindustry Information Transfers Associated With Management Forecasts Of Earnings

This study documents information transfers associated with the sign and magnitude of the changes in earnings expectations conveyed by management forecasts. That is, the management forecast of one firm (discloser) generates unexpected price reactions for firms (nondisclosers) similar to the forecaster. The results are consistent with information transfers documented for releases of actual earnings (Foster [1981]) and sales announcements (Olsen and Dietrich [1985]).1 These results build on prior management forecast research that has documented a link between the sign and magnitude of the changes in earnings expectations conveyed by management forecasts and the unexpected share returns (price reactions) of forecasting firms (Ajinkya and

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