Title

Do Corporations Manage Earnings to Meet/Exceed Analyst Forecasts? Evidence from Pension Plan Assumption Changes

Document Type

Article

Publication Date

6-2014

Publication Source

Review of Accounting Studies

Abstract

A significantly larger number of firms increase the expected rate of return on pension plan assets (ERR) to make their reported earnings meet/exceed analyst forecasts than would be expected by chance. In the short run, the stock market reacts positively to these firms’ earnings announcements, suggesting that investors fail to recognize that earnings benchmarks are achieved through ERR manipulation. In the long run, however, firms that employ this earnings management strategy significantly underperform control firms in both stock returns and operating performance.

Inclusive pages

698–735

ISBN/ISSN

1380-6653

Comments

Permission documentation is on file.

Publisher

Springer

Volume

19

Issue

2

Peer Reviewed

yes