Analyst Forecasts, Earnings Management, and Insider Trading Patterns - Incidence and Performance Consequences

Incidence and Performance Consequences

Markarian, Garen (Otto Beisheim School of Management Germany), Bricker, Robert - Analyst Forecasts, Earnings Management, and Insider Trading Patterns - Incidence and Performance Consequences

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For at least two decades, it was believed that making managers into owners could ameliorate many agency conflicts existing in capital markets settings. In fact, it now appears that managerial ownership of stock itself may encourage earnings manipulations. In this study, we show that CEO insider trading, earnings manipulations, and the ability to meet and exceed market benchmarks are all interrelated. Managers manipulate earnings to exceed analyst earnings forecasts. Additionally, managerial insider selling increases with performance relative to analyst forecasts, and is magnified by stock option holdings. Insider selling is more intense among managers who have used earnings manipulations to exceed forecasts. Additionally, managers who sell following the announcement of an earnings surprise are able to earn abnormal profits. Firms having both positive earnings surprises and insider selling exhibit lower subsequent accounting performance. This study is of interest to academics, practitioners who are interested in the finer mechanisms of markets, and advanced finance students, alike.

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Schrijver: Markarian, Garen (Otto Beisheim School of Management Germany), Bricker, Robert
Titel: Analyst Forecasts, Earnings Management, and Insider Trading Patterns - Incidence and Performance Consequences
Uitgever: VDM Verlag Dr. Mueller E.K.

Jaar: 2008
Taal: Engels
Pagina's: 164

EAN: 9783836473958
Bindwijze: Paperback

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Analyst Forecasts, Earnings Management, and Insider Trading Patterns - Incidence and Performance Consequences

Incidence and Performance Consequences

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