Management Earnings Forecasts and Voluntary Disclosure

Management earnings forecasts are voluntary projections of a company’s future financial performance issued by corporate executives to complement mandatory reporting. These forecasts serve multiple functions: they reduce information asymmetry between insiders and external investors, signal managerial confidence, and help shape market expectations. As a form of voluntary disclosure, forecasts must balance the benefits of increased transparency—such as lower cost of capital and enhanced reputation—against proprietary concerns over revealing sensitive information to competitors. Recent work has examined the drivers of forecasting behaviour, including managerial incentives, governance structures and external shocks, and has developed metrics to assess forecast quality in terms of frequency, precision, accuracy and bias. The global expansion of capital markets, evolving regulatory frameworks and advances in data analytics have further intensified interest in how and why firms choose to disclose forecasts and the implications for market efficiency, analyst coverage and stakeholder decision-making.

Research from Nature Portfolio

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Management Earnings Forecasts and Voluntary Disclosure publication trend

The graph below shows the total number of articles in management earnings forecasts and voluntary disclosure across all publications each year (not limited to Nature Index journals).

Technical terms

Management earnings forecasts: Voluntary projections of future financial performance issued by company management to inform investors and analysts beyond mandatory reports.

Voluntary disclosure: The voluntary provision of information that exceeds regulatory requirements, aimed at reducing information gaps and enhancing stakeholder trust.

Information asymmetry: A situation in which corporate insiders possess more or better information than external investors, potentially leading to mispricing and uncertainty.

Lowball guidance: A forecasting strategy in which managers deliberately issue conservative earnings estimates that are subsequently exceeded by actual results, often to manage market expectations.

Quantitative easing (QE): A monetary policy tool whereby a central bank purchases financial assets to lower interest rates, which may influence firms’ disclosure incentives.

References

1. Does lowball guidance work? An analysis of firms that consistently beat their guidance by large margins. The British Accounting Review (2023).
2. Earnings forecasts of female CEOs: quality and consequences. Review of Accounting Studies (2022).
3. Voluntary disclosures and monetary policy: evidence from quantitative easing. Review of Accounting Studies (2024).