Manager-specific effects on earnings guidance: An analysis of top executive turnovers

Francois Brochet, Lucile Faurel, Sarah McVay

Research output: Contribution to journalArticle

26 Citations (Scopus)

Abstract

We investigate how managers contribute to the provision of earnings guidance by examining the association between top executive turnovers and guidance. Although firm and industry characteristics are important determinants of guidance, we conclude that CEOs participate in firm-level policy decisions, whereas CFOs are involved in the formation or discussion of guidance. Among firms that historically issued frequent guidance, breaks in guidance following CEO turnovers are relatively permanent and are potentially attributable to firm-initiated changes in guidance policy. Breaks following CFO turnovers, however, likely reflect uncertainty on the part of the newly appointed executive-they are concentrated in the two quarters following the turnover, are associated with the background of the newly appointed CFO, and extend to the relative precision of the guidance. Among firms that did not issue guidance historically, we find some evidence that newly appointed externally hired CEOs increase the likelihood of providing guidance.

Original languageEnglish (US)
Pages (from-to)1123-1162
Number of pages40
JournalJournal of Accounting Research
Volume49
Issue number5
DOIs
StatePublished - Dec 2011
Externally publishedYes

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Executive turnover
Guidance
Managers
Earnings guidance
Turnover
Chief executive officer
CEO turnover
Industry characteristics
Uncertainty
Firm characteristics

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Manager-specific effects on earnings guidance : An analysis of top executive turnovers. / Brochet, Francois; Faurel, Lucile; McVay, Sarah.

In: Journal of Accounting Research, Vol. 49, No. 5, 12.2011, p. 1123-1162.

Research output: Contribution to journalArticle

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