This study investigates the effect of managerial discretion over their initial earnings forecasts on future performance. First, by estimating the discretionary portion of initial management earnings forecasts (defined as discretionary forecasts) based on the findings of fundamental analysis...

Prior studies have indicated that earnings are useful for bond market investors and that beating earnings benchmarks is related to a firm's lower cost of debt (Jiang, 2008). This study examines whether management earnings forecasts are related to a firm's cost of debt. Our results indicate that...

We investigate managerial discretion over initial management earnings forecasts issued concurrently with earnings announcements. Japan's unique reporting environment, particularly its systematic bundled management forecasts, produces an earnings benchmark (i.e., forecast innovations) to which...