The Impact of Impending Credit Rating Changes on  Management Earnings Forecasts

Guanming He; Guanming He

Authors

Guanming He
Guanming He

Keywords:

credit ratings; management earnings forecasts; forecast news; forecast accuracy; forecast precision

Abstract

This study investigates whether impending credit rating changes affect managers' voluntary financial disclosure behaviors. I find that firms near a credit rating change do not opportunistically alter their financial disclosure practices to manipulate rating agencies' perceptions about corporate credit risk. In particular, firms close to a credit rating change do not selectively release good news or withhold bad news in their earnings forecasts. Nor do the firms likely issue an optimistically biased forecast or a more precise forecast for good news than for bad news. Overall, there is no evidence suggesting that credit ratings are manipulated via management earnings forecasts.

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How to Cite

The Impact of Impending Credit Rating Changes on Management Earnings Forecasts. (2018). Global Journal of Management and Business Research, 18(C4), 1-18. https://journalofbusiness.org/index.php/GJMBR/article/view/2532

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