Author(s)

Francisco Ellis

Affiliation(s)

Southern University and A&M College, USA.

Corresponding Author

Francisco Ellis

ABSTRACT

The accountability system for major errors in annual report information is an important corporate governance mechanism promoted by the China Securities Regulatory Commission, which has a significant impact on corporate information disclosure behavior. The expected consequences are less studied. The importance and flexibility of management’s earnings forecast is a good scenario to study the strategic choice behavior of companies’ information disclosure. Therefore, to study whether companies that establish error accountability systems strategically choose management’s earnings It is of great theoretical and practical significance to better understand the unintended consequences of the error accountability system on corporate information disclosure. Taking China's A-share listed companies from 2006 to 2017 as samples, the double difference model is used to test the influence of the error accountability system on the accuracy of management earnings forecast and the incremental effect of the system characteristics, and a series of robustness tests are carried out to increase the research results. reliability. A cross-sectional test is carried out from three perspectives of corporate growth, executive gender and institutional shareholding to explore the mechanism of the error accountability system on the accuracy of management's earnings forecast. From the perspective of analysts' earnings forecasting behavior, this paper examines how the strategic choice of management's earnings forecasting accuracy caused by the accountability system for errors affects the company's information environment. The research results support that the error accountability system causes strategic choice behavior for corporate information disclosure, which deteriorates the corporate information environment and has unintended consequences; it enriches the research on corporate governance systems related to misstatements and the strategic choice of management earnings forecasting; Not only provides preliminary evidence for investors to understand the consequences of the error accountability system, but also has a certain reference value for the regulatory authorities to improve the system.

KEYWORDS

Error accountability system; Unexpected consequences; Management earnings forecast accuracy; Analyst earnings forecast accuracy; Corporate information environment.

CITE THIS PAPER

Francisco Ellis. Error accountability system and management earnings forecasting accuracy. World Journal of Management Science. 2023, 1(1): 26-37.

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