Research Details

Abstract

An earnings preannouncement is a public statement about an upcoming earnings announcement made shortly before the official announcement. Managers use preannouncements to guide analysts' and investors' expectations for the soon-to-be-announced earnings amount. Managers most commonly use preannouncements when the earnings number they will ultimately report is very far from analysts' earnings forecasts, when there is a large variation in analysts' forecasts, or when managers have bad news. In recent years, managers have issued earnings preannouncements with increasing frequency. This article summarizes the findings of our recent study of preannouncements (Leonard Soffer, Ramu Thiagarajan and Beverly Walther, "Earnings Preannouncement Strategies," Review of Accounting Studies, Vol. 5, No. 1, 2000) on how managers determine the tentative earnings numbers provided in their preannouncements, and how the market reacts to the preannouncements and the subsequent earnings announcements.

Type

Article

Author(s)

Leonard Soffer, S.Ramu Thiagarajan, Beverly Walther

Date Published

2000

Citations

Soffer, Leonard, S.Ramu Thiagarajan, and Beverly Walther. 2000. Earnings Preannouncements. Investor Relations Quarterly.(3)