The Accuracy and Informativeness of Management Earnings Forecasts: A Review and Unifying Framework*

ABSTRACT This paper synthesizes the literature on management earnings forecasts (MFs) and adaption mechanisms, combines existing theories into a unifying framework, discusses primary determinants of MF accuracy informativeness. The proposed model refines by emphasizing dynamics multiperiod interactions among firm management, financial analysts, investors, thereby simplifying assessment complex relations within forecast cycle. Furthermore, we analyze when to what extent analysts investors anticipate bias misleading information. Overall, review provides strong support for positive correlation between credibility MFs, one hand, stock returns, share liquidity, analyst coverage, other hand. Earnings tend be optimistically biased, with uncertainty, flexibility, distress, investor sentiment, price dependency managers' remuneration. Firm growth, legal liability, litigation risk are significantly associated pessimism. We also find that increases previous accuracy, size, agreement, qualifications, corporate governance level. Moreover, do not full predictable bias, leading systematic drifts after announcement actual earnings. study's results have substantial implications researchers, managers, regulators. Although managers may enhance their forecasts' providing precise, bundled, disaggregated forecasts, external stakeholders should carefully antecedents characteristics assess direction magnitude expected bias.