Effect of Stock Price Pressure on Management Earnings Forecasts

Subject Areas : Management Accounting

Farhad Sharafi ¹ , Shadi Shahverdiani ² , Zohreh Hajiha ³

1 - M.A in Accounting, Islamic Azad university Science and Research branch, Iran
2 - Assistant Professor in Financial Management, Islamic Azad university, Ghods city branch, Iran
3 - Associate Professor in Accounting, Islamic Azad university, Markaz tehran branch, Iran

Received: 2018-12-03 Accepted : 2019-04-09 Published : 2020-03-20

Keywords: Management earnings projection, Stocks Price pressures, managers earnings forecast err, manager earnings aggressive fo,

Abstract :

Management earnings predictive quality, is much higher than predictions by individuals outside the organization. Because managing more information about the status of the company, it is aware of the current plans of the company and has access to the details of financial information from previous periods. In addition, it often allocates significant resources to financial forecasts. The main issue is not whether stock price pressures affect the management earnings predictive quality? The main objective of this research is to investigate the effect of stock price pressure on management earnings expectations in listed companies in Tehran Stock Exchange. Measurement criterion for managers' earnings forecast; Earnings per share are forcasted, managers earnings forecast error and manager earnings aggressive forecast. To test the hypotheses of the research, multiple linear regression model has been used. The results of the survey of 140 companies listed in Tehran Stock Exchange during the period from 2011 to 2016 indicate that stock price pressures have a negative effect on managers earnings forecasting. In addition, the research evidence showed that stock price pressures have a positive effect on the forecast error of managers' earnings. Also, the results showed that stock price pressure had a positive effect on the manager earning aggressive forecast. These results indicate the importance and effectiveness of stock price pressures in managerial earnings forecasts.

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