The Accounting Review Vol. 51 No. 2 1976
A Comparative Examination of Management Forecasts and Box-Jenkins Forecasts of Earnings.
Abstract
This article reports the results of an empirical study which has bearing upon issues of the accuracy of management forecasts of income in particular and the time series properties of earnings data. From the standpoint of whether corporate forecasts of earnings should be disclosed, the question of accuracy is relevant. This article utilizes the Box-Jenkins methodology in the determination of the most appropriate time series model for each firm in the sample. The proposition that management forecasts of income should prove fairly accurate is not supported by the results of this study. In cases in which management forecasts proved reasonably accurate, overall they were not more so than those generated from the time series models. It remains possible that the management forecasts may contain additional information regarding risk or return. For example, market participants may use management forecasts and time series analysis. With respect to the time series properties of quarterly earnings, the results clearly demonstrate the significance of seasonality in quarterly earnings.
- DOI
- 10.2308/tar-4492227
- Volume
- 51
- Issue
- 2
- Pages
- 321-330
- Language
- en
- Sources
- openalex crossref