Faculty of Business Administration

FBE Brown Bag Seminar

Disclosure Policies in Quarterly Earnings Guidance

Prof. Michael TANG

Assistant Professor of Accounting, Stern School of Business, New York University

Abstract

We examine whether differences in guidance patterns reflect differences in disclosure policies by comparing guidance issued by firms that provide “regular” guidance every quarter (over twelve consecutive quarters) to firms that provide guidance sporadically. We find that regular guidance tends to be accurate and have less variable forecast errors. We also find that market participants view regular guidance more credibly than sporadic guidance. Additional results suggest that firms that provide regular guidance are responding to a heightened demand for disclosure from institutional investors, whereas firms that provide guidance sporadically seem to tradeoff the benefits of lowering overly optimistic earnings expectations against the costs of large forecast errors when deciding whether to issue guidance in a particular quarter. Together, we document systematic differences in the quality and credibility of guidance between firms that provide guidance regularly and firms that provide guidance sporadically, suggesting that these firms likely have distinct objectives for issuing guidance.

Date: 19 Dec 2019 (Thursday)

Time: 15:30-16:30

Venue: E22-2007

A Short Biography

Prof. Michael TANG joined New York University Stern School of Business as an Assistant Professor of Accounting in July 2012. He taught Stern undergraduate course of “Principles of Managerial Accounting” and now teaches “Principles of Financial Accounting” to both Stern and non-Stern undergraduate students.

Professor TANG ‘s research focuses on the interactions between managers and capital market participants (such as financial analysts) in communicating financial information, with particular interests in the uncertainty aspect, the multi-period process, and the human factor, that jointly shape earnings expectations. His studies have been accepted for publication in The Accounting Review (TAR), Accounting, Organizations and Society (AOS), and Journal of Accounting, Auditing and Finance (JAAF). He has also reviewed papers for Journal of Accounting and Economics (JAE), Journal of Accounting Research (JAR), Management Science (MS), Review of Accounting Studies (RAST) and for other journals.

Prof. TANG received his B.A. in Finance from Fudan University in Shanghai; his M.S. in Applied Economics, and his Ph.D. in Accounting, from the Simon School of Business of the University of Rochester. Prior to his academic career, Prof. TANG worked in management consulting, including McKinsey and Mercer, and in investment banking at China International Capital Corp. (CICC). He has also completed the Chartered Financial Analyst (CFA) curriculum and is a member of the National Investor Relations Institute (NIRI).