Caught in an Expectations Trap: Risks of Giving Securities Analysts What They Expect
References
- (2003) Can stock recommendations predict earnings management and analysts’ earnings forecast errors? J. Accounting Res. 41(1):1–31.Crossref, Google Scholar
- (2015) Connecting the dots: Bringing external corporate governance into the corporate governance puzzle. Acad. Management Ann. 9(1):483–573.Crossref, Google Scholar
- (2017) The governance impact of a changing investor landscape. J. Internat. Bus. Stud. 48(2):195–221.Crossref, Google Scholar
- (2008) An organizational approach to comparative corporate governance: Costs, contingencies, and complementarities. Organ. Sci. 19(3):475–492.Link, Google Scholar
- (2003) Expectation traps and monetary policy. Rev. Econom. Stud. 70(4):715–741.Crossref, Google Scholar
- (2005) Fixed Effects Regression Methods for Longitudinal Data Using SAS (SAS Press, Cary, NC).Google Scholar
- Audia PG, Greve HR (2006) Less likely to fail? Low performance, firm size, and factory expansion in the shipbuilding industry. Management Sci. 52(1):83–94.Google Scholar
- (2011) Overvaluation and the choice of alternative earnings management mechanisms. Accounting Rev. 86(5):1491–1518.Crossref, Google Scholar
- (1986) The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. J. Personality Soc. Psych. 51(6):1173–1182.Crossref, Google Scholar
- (2002) The rewards to meeting or beating earnings expectations. J. Accounting Econom. 33(2):173–204.Crossref, Google Scholar
- (2016) Toward a dynamic theory of intermediate conformity. J. Management Stud. 53(2):131–160.Crossref, Google Scholar
- Baum JAC, Dahlin KB (2007) Aspiration performance and railroads’ patterns of learning from train wrecks and crashes. Organ. Sci. 18(3):368–385.Google Scholar
- (2005) Dancing with strangers: Aspiration performance and the search for underwriting syndicate partners. Admin. Sci. Quart. 50(4):536–575.Crossref, Google Scholar
- (2006) CEO incentives and earnings management. J. Financial Econom. 80(3):511–529.Crossref, Google Scholar
- (2016) Are boards designed to fail? The implausibility of effective board monitoring. Acad. Management Ann. 10(1):319–407.Crossref, Google Scholar
- (2017) Isomorphism, diffusion and decoupling. Greenwood R, Oliver C, Lawrence T, Meyer R, eds. The SAGE Handbook of Organizational Institutionalism, 2nd ed. (Sage, Thousand Oaks, CA), 77–101.Crossref, Google Scholar
- (2001) Do analysts and auditors use information in accruals? J. Accounting Res. 39(1):45–74.Crossref, Google Scholar
- (2016) Earnings management: Do firms play “follow the leader”? Contemp. Accounting Res. 33(2):616–643.Crossref, Google Scholar
- (2018) Analyzing analyst research: A review of past coverage and recommendations for future research. J. Management 44(1):218–248.Crossref, Google Scholar
- (2001) A temporal analysis of earnings surprises: Profits vs. losses. J. Accounting Res. 39(2):221–241.Crossref, Google Scholar
- (2005) A temporal analysis of quarterly earnings thresholds: Propensities and valuation consequences. Accounting Rev. 80(2):423–440.Crossref, Google Scholar
- (1985) Using daily stock returns: The case of event studies. J. Financial Econom. 14(1):3–31.Crossref, Google Scholar
- Burgstahler DC, Eames MJ (2003) Earnings management to avoid losses and earnings decreases: Are analysts fooled? Contemp. Accounting Res. 20(2):253–294.Google Scholar
- (2006) Management of earnings and analysts’ forecasts to achieve zero and small positive earnings surprises. J. Bus., Finance, Accounting 33(5‐6):633–652.Crossref, Google Scholar
- (1998) Expectation traps and discretion. J. Econom. Theory 81(2):462–492.Crossref, Google Scholar
- (2018) Activist-impelled divestitures and shareholder value. Strategic Management J. 39(10):2726–2744.Crossref, Google Scholar
- (2000) The expectations trap hypothesis. Econom. Perspect. 24(2):21–39.Google Scholar
- (2019) Maintaining a reputation for consistently beating earnings expectations and the slippery slope to earnings manipulation. Contemp. Accounting Res. 36(4):1966–1998.Crossref, Google Scholar
- (1963) A Behavioral Theory of the Firm (Prentice-Hall, Englewood Cliffs, NJ).Google Scholar
- (2011) An analysis of managerial use and market consequences of earnings management and expectation management. Accounting Rev. 86(6):1935–1967.Crossref, Google Scholar
- (1994) The decline and fall of the conglomerate firm in the 1980s: The deinstitutionalization of an organizational form. Amer. Sociol. Rev. 59(4):547–570.Crossref, Google Scholar
- (2000) Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons 14:235–250.Crossref, Google Scholar
- (1995) Detecting earnings management. Accounting Rev. 70(2):193–225.Crossref, Google Scholar
- (2013) Earnings quality: Evidence from the field. J. Accounting Econom. 56(2–3):1–33.Crossref, Google Scholar
- (2016) The misrepresentation of earnings. Financial Analysts J. 72(1):22–35.Crossref, Google Scholar
- (2005) Corporate malfeasance and the myth of shareholder value. Political Power Soc. Theory 17:179–198.Crossref, Google Scholar
- (2015) Asset divestment as a response to media attacks in stigmatized industries. Strategic Management J. 36(8):1205–1223.Crossref, Google Scholar
- (1997) Some thoughts on practical stabilization policy. Amer. Econom. Rev. 87(2):236–239.Google Scholar
- (2010) How do restatements begin? Evidence of earnings management preceding restated financial reports. J. Bus., Finance, Accounting 37:332–355.Crossref, Google Scholar
- (2014) Legacy divestitures: Motives and implications. Organ. Sci. 25(3):815–832.Link, Google Scholar
- (2018) What goes up must… keep going up? Cultural differences in cognitive styles influence evaluations of dynamic performance. J. Appl. Psychol. 103(3):347–358.Crossref, Google Scholar
- (2019) Safe or profitable? The pursuit of conflicting goals. Organ. Sci. 30(4):647–667.Link, Google Scholar
- (2013) Corporate structure and performance feedback: Aspirations and adaptation in M-form firms. Organ. Sci. 24(4):1102–1119.Link, Google Scholar
- (2012) The behavioral theory of the firm: Assessment and prospects. Acad. Management Ann. 6(1):1–40.Crossref, Google Scholar
- (2014) Real earnings management and the cost of new corporate bonds. J. Bus. Res. 67:641–647.Crossref, Google Scholar
- (2013) The impacts of performance relative to analyst forecasts and analyst coverage on firm R&D intensity. Strategic Management J. 34(1):121–130.Crossref, Google Scholar
- (2005) The economic implications of corporate financial reporting. J. Accounting Econom. 40(1-3):3–73.Crossref, Google Scholar
- (2006) Value destruction and financial reporting decisions. Financial Analysts J. 62(6):27–39.Crossref, Google Scholar
- (2016) Temporal institutional work. Acad. Management J. 59(3):1009–1035.Crossref, Google Scholar
- (1998) Performance, aspirations, and risky organizational change. Admin. Sci. Quart. 43(1):58–86.Crossref, Google Scholar
- (2002) Sticky aspirations: organizational time perspective and competitiveness. Organ. Sci. 13(1):1–17.Link, Google Scholar
- (2017) Performance feedback in organizations and groups: Common themes. Argote L, Levine JM, eds. The Oxford Handbook of Group and Organizational Learning (Oxford University Press, New York), 315–336.Google Scholar
- (2018) Goal selection internally and externally: A behavioral theory of institutionalization. Internat. J. Management Rev. 20(S):19–38.Crossref, Google Scholar
- (2013) Wall Street Research: Past, Present, and Future (Stanford University Press, Stanford, CA).Crossref, Google Scholar
- (2008) GE’s profit miss puts focus on its tactics. Financial Times (April 17), https://www.ft.com/content/1a336cac-0bd7-11dd-9840-0000779fd2ac.Google Scholar
- (2019) Earnings shortfalls and strategic profit allocations in segment reporting. Accounting Horizons 33(4):37–58.Crossref, Google Scholar
- (2017) Pseudo-precision? Precise forecasts and impression management in managerial earnings forecasts. Acad. Management J. 60(3):1094–1116.Crossref, Google Scholar
- (2019) The corrective actions organizations pursue following misconduct: A review and research agenda. Acad. Management Ann. 13(2):547–585.Crossref, Google Scholar
- (2013) Escaping expectation traps: How much commitment is required? J. Econom. Dynam. Control 37(3):649–665.Crossref, Google Scholar
- Hong H, Kubik JD, Solomon A (2000) Security analysts' career concerns and herding of earnings forecasts. Rand J. Econom. 31(1):121–144.Google Scholar
- (1993) The modern industrial revolution, exit, and the failure of internal control systems. J. Finance 48(3):831–880.Crossref, Google Scholar
- (1995) Asset sales and increase in focus. J. Financial Econom. 37(1):105–126.Crossref, Google Scholar
- (1991) Earnings management during import relief investigations. J. Accounting Res. 29(2):193–228.Crossref, Google Scholar
- (2021) Financialization and corporate downsizing as a shareholder value strategy. Socio-Econom. Rev., ePub ahead of print July 19, https://doi.org/10.1093/ser/mwab035.Google Scholar
- (2015) Disentangling risk and change: Internal and external social comparison in the mutual fund industry. Admin. Sci. Quart. 60(2):228–262.Crossref, Google Scholar
- (2002) Does meeting earnings expectations matter? Evidence from analyst forecast revisions and share prices. J. Accounting Res. 40(3):727–759.Crossref, Google Scholar
- (2018) Setting the bar: The evaluative and allocative roles of organizational aspirations. Organ. Sci. 29(6):1170–1186.Link, Google Scholar
- (2015) All aspirations are not created equal: The differential effects of historical and social aspirations on acquisition behavior. Acad. Management J. 58(5):1361–1388.Crossref, Google Scholar
- (2017) Firms with inconsistently signed earnings surprises: Do potential investors use a counting heuristic? Contemp. Accounting Res. 34(1):292–313.Crossref, Google Scholar
- (2011) Consistency in meeting or beating earnings expectations and management earnings forecasts. J. Accounting Econom. 51(1-2):37–57.Crossref, Google Scholar
- (1999) Quality information: The lifeblood of our markets. Qual. Assur. 7(2):65–75.Crossref, Google Scholar
- (2008) Earnings management and earnings quality. J. Accounting Econom. 45(2):350–357.Crossref, Google Scholar
- (1991) Do workers prefer increasing wage profiles? J. Labor Econom. 9(1):67–84.Crossref, Google Scholar
- (2002) The effect of beating and missing analysts’ forecasts on the information content of unexpected earnings. J. Accounting Audit. Finance 17(2):155–184.Crossref, Google Scholar
- (2017) Failed stakeholder exchanges and corporate reputation: The case of earnings misses. Acad. Management J. 60(3):880–903.Crossref, Google Scholar
- (1987) Managerial perspectives on risk and risk taking. Management Sci. 33(11):1404–1418.Link, Google Scholar
- (2016) Institutional equivalence: How industry and community peers influence corporate philanthropy. Organ. Sci. 27(5):1325–1341.Link, Google Scholar
- (2002) Management’s incentives to avoid negative earnings surprises. Accounting Rev. 77(3):483–514.Crossref, Google Scholar
- (2001) The effect of missing a quarterly earnings benchmark on the CEO’s annual bonus. Accounting Rev. 76(3):313–332.Crossref, Google Scholar
- (1936) The unanticipated consequences of purposive social action. Amer. Sociol. Rev. 1(6):894–904.Crossref, Google Scholar
- (1948) The self-fulfilling prophecy. Antioch Rev. 8(2):193–210.Crossref, Google Scholar
- (1985) Diversification strategy, profit performance and the entropy measure. Strategic Management J. 6(3):239–255.Crossref, Google Scholar
- (1990) The core competence of the corporation. Harvard Bus. Rev. 68(3):79–91.Google Scholar
- (1991) Corporate performance and CEO turnover: The role of performance expectations. Admin. Sci. Quart. 36(1):1–19.Crossref, Google Scholar
- (2004) The walk‐down to beatable analyst forecasts: The role of equity issuance and insider trading incentives. Contemp. Accounting Res. 21(4):885–924.Crossref, Google Scholar
- (1984) Additional evidence on the relation between divestiture announcements and shareholder wealth. J. Finance 39(5):1437–1448.Crossref, Google Scholar
- (2001) Behavioral responses of CEOs to stock ownership and stock option pay. Acad. Management J. 44(3):477–492.Crossref, Google Scholar
- (2018) The impact of earnings expectations on corporate downsizing. Strategic Management J. 39(10):2691–2702.Crossref, Google Scholar
- (2012) Organizational aspirations, reference points, and goals: Building on the past and aiming for the future. J. Management 38(1):415–455.Crossref, Google Scholar
- (2002) Earnings surprises, growth expectations, and stock returns or don’t let an earnings torpedo sink your portfolio. Rev. Accounting Stud. 7(2-3):289–312.Crossref, Google Scholar
- (1996) Do stock prices fully reflect information in accruals and cash flows about future earnings? Accounting Rev. 71(3):289–315.Google Scholar
- (2021) Protect to damage? Institutional work, unintended consequences and institutional dynamics. Organ. Stud. 42(3):495–517.Crossref, Google Scholar
- (2002) Why new issues and high-accrual firms underperform: The role of analysts’ credulity. Rev. Financial Stud. 15(3):869–900.Crossref, Google Scholar
- (1998) Are accruals during initial public offerings opportunistic? Rev. Accounting Stud. 3:175–208.Crossref, Google Scholar
- (1999) Institutional logics and the historical contingency of power in organizations: Executive succession in the higher education publishing industry, 1958-1990. Amer. J. Sociol. 105(3):801–843.Crossref, Google Scholar
- (2010) From ritual to reality: Demography, ideology, and decoupling in a post-communist government agency. Acad. Management J. 53(6):1474–1498.Crossref, Google Scholar
- (2011) An integrative model of legitimacy judgments. Acad. Management Rev. 36(4):686–710.Crossref, Google Scholar
- (2014) Managers and analysts: An examination of mutual influence. Acad. Management J. 57(3):849–868.Crossref, Google Scholar
- (2008) Analyst coverage and earnings management. J. Financial Econom. 88(2):245–271.Crossref, Google Scholar
- (2004) The social construction of market value: Institutionalization and learning perspectives on stock market reactions. Amer. Sociol. Rev. 69(3):433–457.Crossref, Google Scholar
- (2016) Earnings pressure and long-term corporate governance: Can long-term-oriented investors and managers reduce the quarterly earnings obsession? Organ. Sci. 27(2):354–372.Link, Google Scholar
- (2000) Focusing the corporate product: securities analysts and de-diversification. Admin. Sci. Quart. 45(3):591–619.Crossref, Google Scholar
- (2004) Structural incoherence and stock market activity. Amer. Sociol. Rev. 69(3):405–432.Crossref, Google Scholar
- (2011) Why you shouldn’t buy those quarterly earnings surprises. Wall Street Journal (July 2), https://www.wsj.com/articles/SB10001424052702303763404576419783497869132.Google Scholar
- (2019) Ironing out an investing mystery. Wall Street Journal (November 8), https://www.wsj.com/articles/ironing-out-an-investing-mystery-11573228804.Google Scholar

