Public regulatory reform and management earnings forecasts in a low private litigation environment

Keitha Dunstan, Gerry Gallery, Thu Phuong Truong

Research output: Contribution to journalArticleResearchpeer-review

9 Citations (Scopus)
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Abstract

We examine the impact of continuous disclosure regulatory reform on the likelihood, frequency and qualitative characteristics of management earnings forecasts issued in New Zealand's low private litigation environment. Using a sample of 720 earnings forecasts issued by 94 firms listed on the New Zealand Exchange before and after the reform (1999-2005), we provide strong evidence of significant changes in forecasting behaviour in the post-reform period. Specifically, firms were more likely to issue earnings forecasts to pre-empt earnings announcements and, in contrast to findings in other legal settings, those earnings forecasts exhibited higher frequency and improved qualitative characteristics (better precision and accuracy). An important implication of our findings is that public regulatory reforms may have a greater benefit in a low private litigation environment and thus add to the global debate about the effectiveness of alternative public regulatory reforms of corporate requirements.

Original languageEnglish
Pages (from-to)437-465
Number of pages29
JournalAccounting and Finance
Volume51
Issue number2
DOIs
Publication statusPublished - Jun 2011

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Management earnings forecasts
Litigation
Earnings forecasts
Regulatory reform
New Zealand
Disclosure
Earnings announcements

Cite this

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Public regulatory reform and management earnings forecasts in a low private litigation environment. / Dunstan, Keitha; Gallery, Gerry; Truong, Thu Phuong.

In: Accounting and Finance, Vol. 51, No. 2, 06.2011, p. 437-465.

Research output: Contribution to journalArticleResearchpeer-review

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