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Accounting Review


voluntary disclosure; management earnings forecasts; heaping; proprietary


  1. Linda Smith Bamber
  2. Kai Wai Hui
  3. P. Eric Yeung




    Nearly half of managers’ forecasts of annual earnings per share (EPS) end
    in nickel intervals, whereas only about 20 percent of actual EPS end in nickel intervals.
    We provide evidence on the attributes, determinants, and consequences of this systematic
    wedge between managers’ predictions and firms’ ex post actual performance.
    Managers’ nickel forecasts are not simply a benign response to uncertainty about upcoming
    earnings, because nickel forecasts are not only less accurate, but also they
    are more optimistically biased than non-nickel forecasts. In addition to uncertainty,
    efforts to protect the firm’s proprietary information and self-serving opportunism in
    response to managers’ economic incentives also play incremental roles in explaining
    managers’ propensity to issue forecasts heaped at nickel intervals. We also find
    that managers’ nickel forecasts spur even active analysts to issue forecasts heaped at
    nickel intervals, although analysts’ forecast revisions partially adjust for the optimism
    and noise in managers’ nickel forecasts.


    Vol 85, Nomor 01, Tahun 2010


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