The Influence of Earnings Guidance From and Direction on Investors' Earnings Expectations
Du, Ning
This item is only available for download by members of the University of Illinois community. Students, faculty, and staff at the U of I may log in with your NetID and password to view the item. If you are trying to access an Illinois-restricted dissertation or thesis, you can request a copy through your library's Inter-Library Loan office or purchase a copy directly from ProQuest.
Permalink
https://hdl.handle.net/2142/87157
Description
Title
The Influence of Earnings Guidance From and Direction on Investors' Earnings Expectations
Author(s)
Du, Ning
Issue Date
2005
Doctoral Committee Chair(s)
Marjorie K. Shelley
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Psychology, Social
Language
eng
Abstract
This study presents results of an experiment that examines the joint effects of earnings guidance form and direction on investor's earnings expectations using the Heuristic-Systematic Model (HSM) as a theoretical framework. I focus on the interaction among earnings guidance form (range or point), guidance direction (up or down) and earnings predictability (higher or lower, measured as previous periods' earnings variability and pattern). My results support the following predictions based on an extension of HSM: Lower earnings predictability induces systematic processing, and the combination of vague (range) guidance and a directional cue (up or down) leads decision makers to engage in directional systematic processing. When earnings are less predictable, participants who receive upward (downward) range guidance predict significantly higher (lower) earnings than those who receive upward (downward) point guidance. In contrast, when earnings are more predictable, participants are less motivated to engage in systematic processing. They adopt heuristic processing instead, which reduces their sensitivity to the joint effects of direction and form. Theory and results from this study improve our understanding of how management disclosure characteristics, features of financial reporting and the information environment affect investors' earnings expectations.
Use this login method if you
don't
have an
@illinois.edu
email address.
(Oops, I do have one)
IDEALS migrated to a new platform on June 23, 2022. If you created
your account prior to this date, you will have to reset your password
using the forgot-password link below.
