This paper studies how the investors’ attitude towards earnings surprises affects the managers’ incentives to manipulate earnings in an intertemporal context, where the consensus forecast of the analysts is not exogenously given but determined by the strategic interaction between the analysts and the managers. Our analysis shows that given the asymmetric investors’ reaction to earnings surprise...

Using a sample of 2,085 voluntarily-provided “unbundled” management earnings forecasts in 1,372 unique press releases during the 1997-2006 period, we find significant incremental pricing effects for linguistic sentiment included in management forecast press releases. Our setting is distinct from those examined in prior linguistic studies in that forecasts are voluntarily issued, incentive-drive...

Are Earnings Inequality and Mobility Overstated? The Impact of Non-Classical Measurement Error Measures of inequality and mobility based on self-reported earnings reflect attributes of both the joint distribution of earnings across time and the joint distribution of measurement error and earnings. While classical measurement error would increase measures of inequality and mobility there is subs...

John Knopf, Michael Rebello, Dan Rogers, Steve Smith, and John Thorton. We have further benefited from the comments of the anonymous reviewers. We also gratefully acknowledge the contribution of I/B/E/S Inc. in providing earnings per share forecast data as part of a broad program to encourage research on earnings expectations. *Correspondence author, Department of Finance, J. Mack Robinson Coll...