The rewards to meeting or beating earnings expectations

Eli Bartov, Dan Givoly, Carla Hayn

Research output: Contribution to journalArticle

584 Scopus citations

Abstract

This paper finds that firms that meet or beat current analysts' earnings expectations (MBE) enjoy a higher return over the quarter than firms with similar quarterly earnings forecast errors that fail to meet these expectations. Further, such a premium to MBE, although somewhat smaller, exists in the cases where MBE is likely to have been achieved through earnings or expectations management. The findings also indicate that the premium to MBE is a leading indicator of future performance. This premium and its predictive ability are only marginally affected by whether the MBE is genuine or the result of earnings or expectations management.

Original languageEnglish (US)
Pages (from-to)173-204
Number of pages32
JournalJournal of Accounting and Economics
Volume33
Issue number2
DOIs
StatePublished - Jun 17 2002

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All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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