554
Views
2
CrossRef citations to date
0
Altmetric
Articles

The Effect of Geographic Diversity on Managerial Earnings Forecasts

ORCID Icon, , &
Pages 995-1024 | Received 20 Feb 2019, Accepted 09 Oct 2022, Published online: 04 Nov 2022

References

  • Agarwal, S., & Hauswald, R. (2010). Distance and private information in lending. Review of Financial Studies, 23(7), 2757–2788. https://doi.org/10.1093/rfs/hhq001
  • Ajinkya, B., Bhojraj, S., & Sengupta, P. (2005). The association between outside directors, institutional investors and the properties of management earnings forecasts. Journal of Accounting Research, 43(3), 343–376. https://doi.org/10.1111/j.1475-679X.2005.00174.x
  • Alderfer, C. P., & Smith, K. K. (1982). Studying intergroup relations embedded in organizations. Administrative Science Quarterly, 27(1), 35–65. https://doi.org/10.2307/2392545
  • Amit, R., & Livnat, J. (1988). Diversification strategies, business cycles and economic performance. Strategic Management Journal, 9(2), 99–110. https://doi.org/10.1002/smj.4250090202
  • Ashbaugh, H., & Pincus, M. (2001). Domestic accounting standards, international accounting standards, and the predictability of earnings. Journal of Accounting Research, 39(3), 417–434. https://doi.org/10.1111/1475-679X.00020
  • Ball, R., Jayaraman, S., & Shivakumar, L. (2012). Audited financial reporting and voluntary disclosure as complements: A test of the confirmation hypothesis. Journal of Accounting & Economics, 53(1-2), 136–166. https://doi.org/10.1016/j.jacceco.2011.11.005
  • Berger, P. G., & Hann, R. (2003). The impact of SFAS no. 131 on information and monitoring. Journal of Accounting Research, 41(2), 163–223. https://doi.org/10.1111/1475-679x.00100
  • Beyer, A., Cohen, D. A., Lys, T. Z., & Walther, B. R. (2010). The financial reporting environment: Review of the recent literature. Journal of Accounting & Economics, 50(2-3), 296–343. https://doi.org/10.1016/j.jacceco.2010.10.003
  • Boone, A. L., & White, J. T. (2015). The effect of institutional ownership on firm transparency and information production. Journal of Financial Economics, 117(3), 508–533. https://doi.org/10.1016/j.jfineco.2015.05.008
  • Botosan, C. A., & Stanford, M. (2005). Managers’ motives to withhold segment disclosures and the effect of SFAS no. 131 on analysts’ information environment. The Accounting Review, 80(3), 751–772. https://doi.org/10.2308/accr.2005.80.3.751
  • Bradshaw, M. T., & Sloan, R. G. (2002). GAAP versus the street: An empirical assessment of two alternative definitions of earnings. Journal of Accounting Research, 40(1), 41–66. https://doi.org/10.1111/1475-679x.00038
  • Bushman, R., Chen, Q., Engel, E., & Smith, A. (2004). Financial accounting information, organizational complexity and corporate governance systems. Journal of Accounting & Economics, 37(2), 167–201. https://doi.org/10.1016/j.jacceco.2003.09.005
  • Chen, S., Matsumoto, D., & Rajgopal, S. (2011). Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance. Journal of Accounting and Economics, 51(1-2), 134–150. https://doi.org/10.1016/j.jacceco.2010.10.006
  • Cheynel, E., & Levine, C. B. (2020). Public disclosures and information asymmetry: A theory of the mosaic. The Accounting Review, 95(1), 79–99. https://doi.org/10.2308/accr-52447
  • Cho, Y. J. (2015). Segment disclosure transparency and internal capital market efficiency: Evidence from SFAS no. 131. Journal of Accounting Research, 53(4), 669–723. https://doi.org/10.1111/1475-679X.12089
  • Ciconte, W., Kirk, M., & Tucker, J. W. (2014). Does the midpoint of range earnings forecasts represent managers’ expectations? Review of Accounting Studies, 19(2), 628–660. https://doi.org/10.1007/s11142-013-9259-2
  • Clarke, J. E., Fee, C. E., & Thomas, S. (2004). Corporate diversification and asymmetric information: Evidence from stock market trading characteristics. Journal of Corporate Finance, 10(1), 105–129. https://doi.org/10.1016/S0929-1199(02)00050-0
  • Cornerstone Research. (2013). http://securities.stanford.edu/research-reports/1996-2013/Cornerstone-Research-Securities-Class-Action-Filings-2013-YIR.pdf
  • Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Prentice Hall.
  • Daft, R. L. (1992). Organization theory and design. West Publishing Company.
  • Dorantes, C. A., Li, C., Peters, G. F., & Richardson, V. J. (2013). The effect of enterprise systems implementation on the firm information environment. Contemporary Accounting Research, 30(4), 1427–1461. https://doi.org/10.1111/1911-3846.12001
  • Doyle, J. T., Jennings, J. N., & Soliman, M. T. (2013). Do managers define non-GAAP earnings to meet or beat analyst forecasts? Journal of Accounting and Economics, 56(1), 40–56. https://doi.org/10.1016/j.jacceco.2013.03.002
  • Doyle, J. T., Lundholm, R. J., & Soliman, M. T. (2006). The extreme future stock returns following I/B/E/S earnings surprises. Journal of Accounting Research, 44(5), 849–887. https://doi.org/10.1111/j.1475-679X.2006.00223.x
  • Drake, M. S., Guest, N. M., & Twedt, B. J. (2014). The media and mispricing: The role of the business press in the pricing of accounting information. The Accounting Review, 89(5), 1673–1701. https://doi.org/10.2308/accr-50757
  • Duru, A., & Reeb, D. M. (2002). International diversification and analysts’ forecast accuracy and bias. The Accounting Review, 77(2), 415–433. https://doi.org/10.2308/accr.2002.77.2.415
  • Dye, R. A. (1985). Disclosure of nonproprietary information. Journal of Accounting Research, 23(1), 123–145. https://doi.org/10.2307/2490910
  • Elron, E. (1997). Top management teams within multinational corporations: Effects of cultural heterogeneity. The Leadership Quarterly, 8(4), 393–412. https://doi.org/10.1016/S1048-9843(97)90021-7
  • Ettredge, M. L., Kwon, S. Y., Smith, D. B., & Zarowin, P. A. (2005). The impact of SFAS No. 131 business segment data on the market’s ability to anticipate future earnings. The Accounting Review, 80(3), 773–804. https://doi.org/10.2308/accr.2005.80.3.773
  • Feng, M., Li, C., & McVay, S. (2009). Internal control and management guidance. Journal of Accounting and Economics, 48(2-3), 190–209. https://doi.org/10.1016/j.jacceco.2009.09.004
  • Gallemore, J., & Labro, E. (2015). The importance of the internal information environment for tax avoidance. Journal of Accounting and Economics, 60(1), 149–167. https://doi.org/10.1016/j.jacceco.2014.09.005
  • Gelfand, M. J., Raver, J. L., Nishii, L., Leslie, L. M., Lun, J., Lim, B. C., Duan, L., Almaliach, A., Ang, S., Arnadottir, J., Aycan, Z., Boehnke, K., Boski, P., Cabecinhas, R., Chan, D., Chhokar, J., D’Amato, A., Ferrer, M., Fischlmayr, I. C., … Yamaguchi, S. (2011). Differences between tight and loose cultures: A 33-nation study. Science, 332(6033), 1100–1104. https://doi.org/10.1126/science.1197754
  • Ghoshal, S. (1987). Global strategy: An organizing framework. Strategic Management Journal, 8(5), 425–440. https://doi.org/10.1002/smj.4250080503
  • Gow, I. D., Larcker, D. F., & Reiss, P. C. (2016). Causal inference in accounting research. Journal of Accounting Research, 54(2), 477–523. https://doi.org/10.1111/1475-679X.12116
  • Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), 3–73. https://doi.org/10.1016/j.jacceco.2005.01.002
  • Gu, Z., & Chen, T. (2004). Analysts’ treatment of nonrecurring items in street earnings. Journal of Accounting and Economics, 38, 129–170. https://doi.org/10.1016/j.jacceco.2004.09.002
  • Guay, W., Samuels, D., & Taylor, D. (2016). Guiding through the fog: Financial statement complexity and voluntary disclosure. Journal of Accounting and Economics, 62(2-3), 234–269. https://doi.org/10.1016/j.jacceco.2016.09.001
  • Habib, M. A., Johnsen, D. B., & Naik, N. Y. (1997). Spinoffs and information. Journal of Financial Intermediation, 6(2), 153–176. https://doi.org/10.1006/jfin.1997.0212
  • Heinle, M. S., Samuels, D., & Taylor, D. J. (2018). Proprietary costs and disclosure substitution: Theory and empirical evidence. Available at SSRN, 3173664.
  • Heitzman, S., & Huang, M. (2019). Internal information quality and the sensitivity of investment to market prices and accounting profits. Contemporary Accounting Research, 36(3), 1699–1723.
  • Herrmann, D., Kang, T., & Kim, J. (2010). International diversification and management earnings guidance: The effects of Reg FD. Journal of International Accounting Research, 9(1), 1–22. https://doi.org/10.2308/jiar.2010.9.1.1
  • Hirst, D. E., Koonce, L., & Venkataraman, S. (2008). Management earnings forecasts: A review and framework. Accounting Horizons, 22(3), 315–338. https://doi.org/10.2308/acch.2008.22.3.315
  • Hitt, M. A., Bierman, L., Uhlenbruck, K., & Shimizu, K. (2006). The importance of resources in the internationalization of professional service firms: The good, the bad, and the ugly. Academy of Management Journal, 49(6), 1137–1157. https://doi.org/10.5465/amj.2006.23478217
  • Hitt, M. A., Hoskisson, R. E., & Kim, H. (1997). International diversification: Effects on innovation and firm performance in product-diversified firms. Academy of Management Journal, 40(4), 767–798. https://doi.org/10.2307/256948
  • Houston, J. F., Lev, B., & Tucker, J. W. (2010). To guide or not to guide? Causes and consequences of stopping quarterly earnings guidance. Contemporary Accounting Research, 27(1), 143–185. https://doi.org/10.1111/j.1911-3846.2010.01005.x
  • Jayaraman, S., & Wu, J. S. (2019). Is silence golden? Real effects of mandatory disclosure. The Review of Financial Studies, 32(6), 2225–2259. https://doi.org/10.1093/rfs/hhy088
  • Jung, W.-O., & Kwon, Y. K. (1988). Disclosure when the market is unsure of information endowment of managers. Journal of Accounting Research, 26(1), 146–153. https://doi.org/10.2307/2491118
  • Kim, W. C., Hwang, P., & Burgers, W. P. (1993). Multinationals’ diversification and the risk-return trade-off. Strategic Management Journal, 14(4), 275–286. https://doi.org/10.1002/smj.4250140404
  • Krishnaswami, S., & Subramaniam, V. (1999). Information asymmetry, valuation, and the corporate spin-off decision. Journal of Financial Economics, 53(1), 73–112. https://doi.org/10.1016/S0304-405X(99)00017-3
  • Markides, C. C., & Ittner, C. D. (1994). Shareholder benefits from corporate international diversification: Evidence from US international acquisitions. Journal of International Business Studies, 25(2), 343–366. https://doi.org/10.1057/palgrave.jibs.8490204
  • Matsumoto, D. A. (2002). Management’s incentives to avoid negative earnings surprises. The Accounting Review, 77(3), 483–514. https://doi.org/10.2308/accr.2002.77.3.483
  • Merchant, K. A. (1985). Budgeting and the propensity to create budgetary slack. Accounting, Organizations and Society, 10(2), 201–210. https://doi.org/10.1016/0361-3682(85)90016-9
  • Mittal, V., Kamakura, W. A., & Govind, R. (2004). Geographic patterns in customer service and satisfaction: An empirical investigation. Journal of Marketing, 68(3), 48–62. https://doi.org/10.1509/jmkg.68.3.48.34766
  • Nagar, V., Nanda, D., & Wysocki, P. (2003). Discretionary disclosure and stock-based incentives. Journal of Accounting and Economics, 34(1-3), 283–309. https://doi.org/10.1016/S0165-4101(02)00075-7
  • Nanda, V., & Narayanan, M. (1999). Disentangling value: Financing needs, firm scope, and divestitures. Journal of Financial Intermediation, 8(3), 174–204. https://doi.org/10.1006/jfin.1999.0265
  • Neyman, J., & Scott, E. L. (1948). Consistent estimates based on partially consistent observations. Econometrica: Journal of the Econometric Society, 16(1), 1–32. https://doi.org/10.2307/1914288
  • Noh, S., So, E. C., & Weber, J. P. (2019). Voluntary and mandatory disclosures: Do managers view them as substitutes? Journal of Accounting and Economics, 68(1), 101243. https://doi.org/10.1016/j.jacceco.2019.101243
  • Pastor, L., & Veronesi, P. (2009). Learning in financial markets. Annual Review of Financial Economics, 1(1), 361–381. https://doi.org/10.1146/annurev.financial.050808.114428
  • Petersen, M. A. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1), 435–480. https://doi.org/10.1093/rfs/hhn053
  • Pozen, D. E. (2005). The mosaic theory, national security, and the freedom of information act. Yale LJ, 115, 628. https://heinonline.org/HOL/Page?handle=hein.journals/ylr115&div=32&g_sent=1&casa_token=&collection=journals.
  • Reeb, D. M., Kwok, C. C., & Baek, H. Y. (1998). Systematic risk of the multinational corporation. Journal of International Business Studies, 29(2), 263–279. https://doi.org/10.1057/palgrave.jibs.8490036
  • Rogers, J. L., & Stocken, P. C. (2005). Credibility of management forecasts. The Accounting Review, 80(4), 1233–1260. https://doi.org/10.2308/accr.2005.80.4.1233
  • Rogers, J. L., & Van Buskirk, A. (2009). Shareholder litigation and changes in disclosure behavior. Journal of Accounting and Economics, 47(1-2), 136–156. https://doi.org/10.1016/j.jacceco.2008.04.003
  • Rogers, J. L., & Van Buskirk, A. (2013). Bundled forecasts in empirical accounting research. Journal of Accounting and Economics, 55(1), 43–65. https://doi.org/10.1016/j.jacceco.2012.06.001
  • Rugman, A. M. (1976). Risk reduction by international diversification. Journal of International Business Studies, 7(2), 75–80. https://doi.org/10.1057/palgrave.jibs.8490702
  • Scott, W. R. (1992). Organizations: Rational, natural, and open systems. Prentice-Hall.
  • Teece, D. J. (1980). Economies of scope and the scope of the enterprise. Journal of Economic Behavior & Organization, 1(3), 223–247. https://doi.org/10.1016/0167-2681(80)90002-5
  • Tetlock, P. C. (2007). Giving content to investor sentiment: The role of media in the stock market. The Journal of Finance, 62(3), 1139–1168. https://doi.org/10.1111/j.1540-6261.2007.01232.x
  • Thomas, S. (2002). Firm diversification and asymmetric information: Evidence from analysts’ forecasts and earnings announcements. Journal of Financial Economics, 64(3), 373–396. https://doi.org/10.1016/S0304-405X(02)00129-0
  • Vashishtha, R. (2014). The role of bank monitoring in borrowers’ discretionary disclosure: Evidence from covenant violations. Journal of Accounting and Economics, 57(2-3), 176–195. https://doi.org/10.1016/j.jacceco.2014.04.002
  • Wang, I. Y. (2007). Private earnings guidance and its implications for disclosure regulation. The Accounting Review, 82(5), 1299–1332. https://doi.org/10.2308/accr.2007.82.5.1299
  • Waymire, G. (1985). Earnings volatility and voluntary management forecast disclosure. Journal of Accounting Research, 23(1), 268–295. https://doi.org/10.2307/2490919
  • Zhou, F. S. (2021). Disclosure dynamics and investor learning. Management Science, 67(6), 3429–3446. https://doi.org/10.1287/mnsc.2020.3638
  • Zhou, Y. M. (2011). Synergy, coordination costs, and diversification choices. Strategic Management Journal, 32(6), 624–639. https://doi.org/10.1002/smj.889

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.