Titre
Corporate investment and earnings surprises
Type
article
Institution
UNIL/CHUV/Unisanté + institutions partenaires
Périodique
Auteur(s)
Markarian, Garen
Auteure/Auteur
Michenaud, Sebastien
Auteure/Auteur
Liens vers les personnes
Liens vers les unités
ISSN
1351-847X
Statut éditorial
Publié
Date de publication
2019-11-02
Volume
25
Numéro
16
Première page
1485
Dernière page/numéro d’article
1509
Langue
anglais
Résumé
We find that firm-level investment is negatively related to the likelihood of meeting or beating analysts’ short-term EPS forecasts. In a 35-year panel dataset of US based companies, we find evidence that suggests firms with the best growth opportunities, opaque firms, and firms with higher than usual bonus compensation, are the ones to alter investment in order to beat benchmarks. Utilizing the passage of Sarbanes-Oxley as a natural experiment we find that firms trade off accruals-based earnings management in lieu of investment cuts. Results are robust to a number of covariates, and endogeneity or reverse causality does not seem to drive our inferences. This study suggests that, consistent with survey results from Graham, Harvey, and Rajgopal [2005. “The Economic Implications of Corporate Financial Reporting.” Journal of Accounting and Economics 40: 3–73], managers may reduce or delay corporate investment to meet or beat short-term earnings benchmarks.
Sujets
PID Serval
serval:BIB_B676F2641100
Date de création
2021-05-05T08:03:57.389Z
Date de création dans IRIS
2025-05-21T03:56:46Z