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Earnings Management, Forecast Guidance and the Banking Crisis

Beccalli, E. and Bozzolan, S. and Menini, A. Molyneux P. (2013) Earnings Management, Forecast Guidance and the Banking Crisis. The European Journal of Finance, 21 (3). pp. 242-268. DOI: 10.1080/1351847X.2013.809548

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Abstract

This paper studies earnings management (EM) and forecast guidance (FG) activities of European banks between 2004 and 2008. Using 22,564 analyst forecasts for 55 banks, we find that the proportion of banks hitting or beating analyst consensus fell from 68.22% pre-crisis to 28.13% during the crisis. Banks enjoy higher cumulative adjusted returns (CARs) when they hit analyst consensus only in the crisis. EM is evident pre- but not during the crisis � it has no CAR effects. FG increases the probability of hitting benchmark earnings and during the crisis yields higher CARs. EM and FG act as complements in the crisis period.

Item Type: Article
Subjects: Research Publications
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Date Deposited: 25 Sep 2015 02:33
Last Modified: 11 Dec 2015 03:25
ISSN: 1351-847X
URI: http://e.bangor.ac.uk/id/eprint/5428
Identification Number: DOI: 10.1080/1351847X.2013.809548
Publisher: Taylor & Francis
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