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Guidance, guidance and guidance
Descriptive
TypeOfResource
Text
TitleInfo
Title
Guidance, guidance and guidance
SubTitle
the discontinuing and restarting phenomenon of quarterly earnings guidance
Identifier
ETD_1935
Identifier
(type = hdl)
http://hdl.rutgers.edu/1782.2/rucore10002600001.ETD.000051646
Identifier
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doi:10.7282/T3GM87H9
Language
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(authority = ISO 639-3:2007);
(type = text)
English
Genre
(authority = marcgt)
theses
Subject
(authority = RUETD)
Topic
Management
Subject
(authority = ETD-LCSH)
Topic
Corporate profits--Forecasting
Subject
(authority = ETD-LCSH)
Topic
Investment analysis
Subject
(authority = ETD-LCSH)
Topic
Corporations--Finance
Abstract
(type = abstract)
This dissertation proposes and examines three research questions on quarterly earnings guidance on its discontinuity and revival. In particular, it examines the impact of corporate governance on a firm’s decision to stop quarterly earnings guidance, the impact of its discontinuity on a firm’s investment decisions, and why a firm restarts providing quarterly earnings guidance. Corporate governance is measured by board independence, institutional ownership, types of institutional ownership and CEOs compensation. A firm’s long term investments are measured by capital and Research and Development (R & D) expenditure. Theories of firm performance and earnings expectation management are used to explain a firm’s decision to restart.
Using an industry-year-quarter matched sample of 1610 firms (the STOPPERS and the MAINTAINERS) from 2001 to 2006, this study finds that a firm is more likely to stop quarterly earnings guidance when its board is more independent, institution ownership is lower, the dedicate institution ownership is higher and the level of cash proportion of CEOs compensation is higher. It also finds a firm is more likely to stop when both past and expected future earnings performances are poorer or more difficult to predict or the management is more optimistic or litigation risk is lower.
Second, this study finds that the STOPPERS have higher levels of capital expenditure and R & D expenditure in the subsequence years following the stop event (one and two years). The change levels of the STOPPERS are higher than that of the MAINTAINERS. It implies that the quarterly earnings guidance has adverse impact on firm’s long term investments.
Third, using an industry-year-quarter matched sample of 342 firms (the RESUMERS and the NONRESUMERS) from 2004 to 2008, it finds that a firm is more likely to restart when its earnings and market return improve, or when the prevailing market expectations are higher to beat/meet. In addition, it finds that the R & D expenditure of the RESUMERS are higher than that of the NONRESUMERS in the three years before the restart event, which implies that the RESUMERS increase R & D and capital expenditure after the stoppage, and improve the firm performance.
Using an industry-year-quarter matched sample of 1610 firms (the STOPPERS and the MAINTAINERS) from 2001 to 2006, this study finds that a firm is more likely to stop quarterly earnings guidance when its board is more independent, institution ownership is lower, the dedicate institution ownership is higher and the level of cash proportion of CEOs compensation is higher. It also finds a firm is more likely to stop when both past and expected future earnings performances are poorer or more difficult to predict or the management is more optimistic or litigation risk is lower.
Second, this study finds that the STOPPERS have higher levels of capital expenditure and R & D expenditure in the subsequence years following the stop event (one and two years). The change levels of the STOPPERS are higher than that of the MAINTAINERS. It implies that the quarterly earnings guidance has adverse impact on firm’s long term investments.
Third, using an industry-year-quarter matched sample of 342 firms (the RESUMERS and the NONRESUMERS) from 2004 to 2008, it finds that a firm is more likely to restart when its earnings and market return improve, or when the prevailing market expectations are higher to beat/meet. In addition, it finds that the R & D expenditure of the RESUMERS are higher than that of the NONRESUMERS in the three years before the restart event, which implies that the RESUMERS increase R & D and capital expenditure after the stoppage, and improve the firm performance.
PhysicalDescription
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electronic resource
Extent
x, 191 p. : ill.
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application/pdf
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Note
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Ph.D.
Note
(type = bibliography)
Includes bibliographical references (p. 150-154)
Note
(type = statement of responsibility)
by Naqiong Tong
Name
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Tong
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Naqiong
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1979
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author
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Naqiong Tong
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Jaggi
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Bikki
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chair
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Advisory Committee
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Bikki Jaggi
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Palmon
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Dan
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internal member
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Dan Palmon
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Wu
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Yangru
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Advisory Committee
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Yangru Wu
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Cohen
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Daniel
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outside member
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Daniel Cohen
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Rutgers University
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degree grantor
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Graduate School - Newark
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school
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2009
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2009-10
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xx
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TitleInfo
Title
Rutgers University Electronic Theses and Dissertations
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ETD
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TitleInfo
Title
Graduate School - Newark Electronic Theses and Dissertations
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rucore10002600001
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NjNbRU
Genre
(authority = ExL-Esploro)
ETD doctoral
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Rights
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The author owns the copyright to this work.
Copyright
Status
Copyright protected
Notice
Note
Availability
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Open
Reason
Permission or license
Note
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Tong
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Naqiong
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Naqiong Tong
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Rutgers University. Graduate School - Newark
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Author Agreement License
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I hereby grant to the Rutgers University Libraries and to my school the non-exclusive right to archive, reproduce and distribute my thesis or dissertation, in whole or in part, and/or my abstract, in whole or in part, in and from an electronic format, subject to the release date subsequently stipulated in this submittal form and approved by my school. I represent and stipulate that the thesis or dissertation and its abstract are my original work, that they do not infringe or violate any rights of others, and that I make these grants as the sole owner of the rights to my thesis or dissertation and its abstract. I represent that I have obtained written permissions, when necessary, from the owner(s) of each third party copyrighted matter to be included in my thesis or dissertation and will supply copies of such upon request by my school. I acknowledge that RU ETD and my school will not distribute my thesis or dissertation or its abstract if, in their reasonable judgment, they believe all such rights have not been secured. I acknowledge that I retain ownership rights to the copyright of my work. I also retain the right to use all or part of this thesis or dissertation in future works, such as articles or books.
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