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Temptations of Managers Providing Guidance to Investors

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What temptations might managers face if they have provided earnings guidance to investors and later find it difficult to meet the expectations that they helped create? Explain.

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Solution Summary

This solution details the the temptations that managers might face in relation to investors and also explains how expectations might not be met in the future. All references used are included.

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Issuing projecting earning statements began in the 1980s but required cautionary language to be ncluded. One problem created by this was that earnings guidance was used to lower the expectations of stock analysts so that when the real numbers came out the stock would then jump when it ...

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Danny Sava, PhD
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  • PhD, Capella University
  • MBA, Grantham University
  • BSc, Grantham University
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