What does this research mean for the field?

Management forecast precision is directly related to the impact of those forecasts on equity pricing, and explicit disclosures of forecast uncertainty independently increase the dispersion of subsequent analyst forecasts. Novelty: ClaimNovelty.CONFIRMATORY. Consensus alignment: ConsensusAlignment.NEUTRAL.

March 18, 2026The Accounting Review

The Effects of Management Forecast Precision on Equity Pricing and on the Assessment of Earnings Uncertainty.

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Authors

SBStephen P. Baginski ECEdward J. ConradUniversity of Akron JHJohn M. HassellIndiana University – Purdue University Indianapolis

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Implication

Examines how management forecast precision impacts equity pricing and earnings uncertainty assessment, suggesting significant implications for market evaluations.

Key Points

The study aims to evaluate the impact of management forecast precision on equity pricing and earnings uncertainty assessments.
Analyzed a sample of 868 management forecasts for annual and interim earnings from 1983-1986.
Tested relationships between forecast precision and unexpected returns using a modified regression model.
Assessed the precision of management forecasts compared to analyst forecasts and documented their degree of uncertainty.
Found a direct relationship between forecast precision and management forecasts' significance in security pricing.
Noted that variance in analyst forecasts increased alongside management's forecast uncertainty labeling.
Supported the hypothesis that higher precision in forecasts leads to improved assessments of earnings uncertainty.

Cite This Study

Baginski et al. (1993) studied this question.

synapsesocial.com/papers/69ba43d84e9516ffd37a5734 https://doi.org/10.2308/tar-9403090175

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Implication

Examines how management forecast precision impacts equity pricing and earnings uncertainty assessment, suggesting significant implications for market evaluations.

The Effects of Management Forecast Precision on Equity Pricing and on the Assessment of Earnings Uncertainty.

Discussion

Member takes

Implication

Key Points

Cite This Study

The Effects of Management Forecast Precision on Equity Pricing and on the Assessment of Earnings Uncertainty.

Discussion

Member takes

Implication

Key Points

Cite This Study

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