Management Earnings Forecasts, Information Asymmetry, and Liquidity: An Empirical Investigation

64 Pages Posted: 25 Jun 2007

See all articles by Mikhail Pevzner

Mikhail Pevzner

University of Baltimore - Merrick School of Business

Date Written: July 2007

Abstract

This study investigates (1) whether forecasting firms have lower liquidity prior to the issuance of a management-earnings forecast than non-forecasting firms and (2) whether forecasting earnings has a persistent affect on a firm's liquidity. I find that, first, forecasting firms have greater liquidity in the period prior to a forecast. Second, while issuing forecast increases liquidity in over short windows, this effect is not significant over longer windows. Third, initiating or ceasing the issuance of earnings forecasts has no significant long-term effect on the firm's liquidity. Combined, these results suggest that management earnings forecasting decision does not appear to be driven by liquidity-improvement goals, and that management earnings forecasts do not appear to strongly affect firms' liquidity.

Keywords: managment earnings forecast, information assymetry, liquidity

JEL Classification: M41, M45

Suggested Citation

Pevzner, Mikhail, Management Earnings Forecasts, Information Asymmetry, and Liquidity: An Empirical Investigation (July 2007). Available at SSRN: https://ssrn.com/abstract=994960 or http://dx.doi.org/10.2139/ssrn.994960

Mikhail Pevzner (Contact Author)

University of Baltimore - Merrick School of Business ( email )

1420 N. Charles St.
Baltimore, MD 21201-5779
United States

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