Is Corporate Disclosure Behavior Really Sticky?

Abstract

This study examines whether corporatedisclosure behavior is sticky and if so, why. From the Company IssuedGuidance database created by Thompson First Call, 1,085 firm-years in which afirm skips a year of earnings forecast are identified. Based on a logit analysis, three potentialreasons for that skip are explored: 1) the company missed its earnings targetin the prior year, 2) they experienced more earnings volatility than expected, and3) they received incoming bad news. The results show that a firm is morelikely to skip if it missed its earnings target by a large margin in the prioryear. The results also suggest that thisoccurs in cases where a firm experiences higher earnings volatility. Incoming bad news is not a factor.