(Dis)aggregated earnings forecasts and acquisition financing

This study investigates the relationship between industry competition and managers' voluntary disclosure policies and examined how the corporate governance structure affects this relationship in South Korean companies. The fiercer the competition within the industry to which the company belongs, the higher the incentive for managers to perform strategic actions to improve their competition status. This increase in the strategic incentives of managers can be seen through voluntary disclosure policies. The empirical results of this study are as follows. First, it was found that there was a negative relationship between the degree of industry competition and the level of voluntary disclosure of greenhouse gas emissions information. This means that managers perform less disclosure to maximize the value of the company because the more competition within the industry intensifies, the higher the proprietary cost of disclosing information on greenhouse gas emissions information. Second, it was found that the corporate governance structure weakened the relationship between the degree of industry competition and the level of corporate voluntary disclosure. These results can be interpreted as that a good governance structure supports such managers' disclosure decisions because managers are more likely to choose disclosure policies to maximize the value of the company than personal benefits even in the fierce industry competition.

Voluntary Disclosure vs. Mandatory Disclosure: The Case of IFRS Introduction on European Firms

This study examines how the form of management's earnings guidance (point, narrow range, wide range) affects analysts' earnings forecasts. Results from two experiments demonstrate that: (1) guidance form has no effect on analysts' forecasts made immediately after the guidance; and (2) after the actual earnings announcement, guidance form and the relationship of the earnings guidance to actual earnings (guidance error) interact in their effect on analysts' forecasts. After the actual earnings announcement, guidance error leads to higher (lower) analysts' forecasts for firms with downwardly (upwardly) biased guidance; this effect of guidance error is magnified by a narrow range and reduced by a wide range, compared to a point estimate. These results suggest that treating the mean of the range endpoints as equivalent to a point estimate and failing to consider effects after the release of actual earnings may paint an incomplete picture of how management guidance affects analysts and investors. It also offers useful information to managers who issue earnings guidance, and presents a challenge to the psychology literature regarding the effects of information precision on judgment and decision making.

A recent Journal of Applied Business Research article by Sheikholesami, Wilson and Slevin (1998) examined the accuracy of security analysts' earnings forecasts for CEO change firms relative to a control group.  The authors applied ANOVA on Value Line percentage forecast error measures and found "marginally significant" results indicating "that precision improved more for CEO change firms than for control firms."  Doran (1998) tests for superior methods when scrutinizing forecast error.  He finds percentage forecast error data to be severely non-normal, and demonstrates that nonparametric tests based upon ranks are superior to parametric methods.  If analysts' earnings forecast precision actually improves more for CEO change firms, test results should be stronger using rank values instead of discrete percentage error measures.

We investigate how managers contribute to the provision of earnings guidance by examining the association between top executive turnovers and guidance. Although firm and industry characteristics are important determinants of guidance, we conclude that CEOs participate in firm-level policy decisions, whereas CFOs are involved in the formation or discussion of guidance. Among firms that historically issued frequent guidance, breaks in guidance following CEO turnovers are relatively permanent and are potentially attributable to firm-initiated changes in guidance policy. Breaks following CFO turnovers, however, likely reflect uncertainty on the part of the newly appointed executive—they are concentrated in the two quarters following the turnover, are associated with the background of the newly appointed CFO, and extend to the relative precision of the guidance. Among firms that did not issue guidance historically, we find some evidence that newly appointed externally hired CEOs increase the likelihood of providing guidance.

The effect of cash flow forecasts on accrual quality and benchmark beating

Nasal polyps are abnormal lesions that cause airway obstruction and can occur along with other respiratory diseases. On account of its association with aspirin exacerbated respiratory disease (AERD), the human discoidin, CUB and LCCL domain containing 2 (DCBLD2) is hypothesized to be a candidate gene for the development of nasal polyps in asthma patients. A total of 12 single-nucleotide polymorphisms (SNPs) were genotyped in 467 Korean asthma patients who were stratified further into 108 AERD and 353 aspirin-tolerant asthma (ATA) subgroups. Five major haplotypes were inferred from pairwise comparison of the polymorphisms. The patients were matched to control for confounds, and differences in the frequency distribution of DCBLD2 SNPs and haplotypes were analyzed using logistic models via various modes of genetic inheritance. Results reveal significant association of rs828618 and DCBLD2_ht1 with nasal polyposis in the overall asthma patients group (P = 0.006, P(corr) = 0.05). Interestingly, the strength of association were maintained in the ATA subgroup (P = 0.007, P(corr) = 0.06), and moderate correlation was detected in the AERD subgroup (P = 0.04-0.05, P(corr) > 0.05). Although further replication and validation are needed, these findings suggest that DCBLD2 could be a potential marker and drug target for treatment of nasal polyposis in Korean asthma patients.

Variability in Reoperation Rates at 182 Hospitals: A Potential Target for Quality Improvement

Transgenic mouse assays have provided an unprecedented opportunity to study mutagenesis in diverse rodent tissues. In this article data from MutaMouse mutagenicity assays based on the Escherichia coli gene lacZ were analyzed systematically using liver and bone marrow as potential target tissues. Sources of variation, including plates (within packaging reactions), packaging reactions (within animals) and animals, were evaluated for extra-binomial variation. Although hardly any evidence of overdispersion was detected at the plate level, limited evidence of extra-binomial variation was observed at the packaging reaction level. There was, however, much stronger evidence of overdispersion at the animal level. Statistical tests for increasing trend in mutant frequency with increasing dose were also performed at the animal level. A significant increasing trend following exposure to N-nitrosodibenzylamine was detected in liver but not in bone marrow. A logistical model was used to further describe the dose-response relationship observed in N-nitrosodibenzylamine-treated liver tissue.

Fuzzy real options modeling has developed greatly in the last decade. Fuzzy real options are for real investments what financial options are for investments on financial assets. Main differences from the valuation perspective include, e.g., that real investments are often unique, and their real option value cannot be derived from market data. The valuation of real investments typically uses investors’ in-house knowledge, which can be combined with real-time market data. The investor in our case is an acquiring company with a task to ex-ante evaluate potential acquisition target companies for which the acquirer obtains real options to create value through managerial flexibility arising from the merger and acquisition process, where strategic and economic capital of the acquired and the target company are put together. In this paper, we extend the credibilistic fuzzy pay-off method to interval-valued fuzzy trapezoidal numbers with an optimism–pessimism measure and discuss how it can be integrated into a digital coaching tool developed by the authors. We demonstrate through a numerical example with R code how the method can be used in valuing corporate acquisition targets with real options available to an acquiring company together with an optimism–pessimism level of analysts about the value-creation through managerial actions.KeywordsCredibility theoryOptimism–pessimism measureReal optionsInterval-valued fuzzy numbersMergers and acquisitions

The Joint Effect of Management's Prior Forecast Accuracy and the Form of Its Financial Forecasts on Investor Judgment

How informative is qualitative management earnings guidance?

Takeover prediction using forecast combinations

Here, we present an equipment-free, distance-based quantitative detection platform on paper. This platform uses the aggregation of DNA oligomer-conjugated microspheres to produce solutions that have variable wicking distances based on the degree of aggregation. In this initial demonstration, we detect a short ssDNA oligomer with a limit of detection of 10 nM and a quantitative detection range from 10 nM to 1 µM. We believe this technique holds the potential to be widely adaptable to a variety of potential target analytes. Specifically, we demonstrate its use in the detection of single-stranded nucleotide oligomers.

Analyst reputation and management earnings forecasts