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Earnings management, forecast guidance and the banking crisis

Beccalli, Elena, Bozzolan, Saverio, Menini, Andrea and Molyneux, Philip (2013) Earnings management, forecast guidance and the banking crisis. European Journal of Finance, 21 (3). pp. 242-268. ISSN 1351-847X

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Identification Number: 10.1080/1351847X.2013.809548

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
Official URL: http://www.tandfonline.com/toc/rejf20/current
Additional Information: © 2013 Taylor and Francis Group, LLC
Divisions: Accounting
Subjects: H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting
Sets: Departments > Accounting
Date Deposited: 16 Jul 2013 13:29
Last Modified: 20 Feb 2019 10:34
URI: http://eprints.lse.ac.uk/id/eprint/51109

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