Document Type


Date of Degree

Summer 2011

Degree Name

PhD (Doctor of Philosophy)

Degree In

Business Administration

First Advisor

W. Bruce Johnson

First Committee Member

Daniel W. Collins

Second Committee Member

Jon A. Garfinkel

Third Committee Member

Cristi A. Gleason

Fourth Committee Member

Paul Hribar


This study adds to the earnings guidance debate by investigating whether quarterly guidance is related to two forms of earnings management: (1) benchmark beating and (2) accounting irregularities. Using a post-Regulation Fair Disclosure sample, I find that firms regularly issuing earnings guidance display a discontinuity around zero in their distribution of management forecast errors and a larger discontinuity in their distribution of analyst forecast errors compared to non-guiding firms. Multivariate tests reveal that guiding firms recognize large abnormal accruals to beat their own guidance, but not to beat analyst forecasts, whereas non-guiding firms do recognize large abnormal accruals to beat analyst forecasts. Overall, guiding firms and non-guiding firms use similar levels of abnormal accruals to beat benchmarks. I also find no statistical relation between quarterly guidance and the likelihood of accounting irregularities. In sum, the evidence shows that while guiding firms and non-guiding firms manage earnings to different benchmarks, they are similar in terms of their aggregate earnings management.


Earnings Guidance, Earnings Management


vii, 60 pages


Includes bibliographical references (pages 56-60).


Copyright 2011 Andrew Acito