%0 Journal Article
	%A Tero Halme and  Juho Kanniainen and  Markus Nordberg
	%D 2013
	%J International Journal of Economics and Management Engineering
	%B World Academy of Science, Engineering and Technology
	%I Open Science Index 78, 2013
	%T How Stock Market Reacts to Guidance Revisions and Actual Earnings Surprises
	%U https://publications.waset.org/pdf/17231
	%V 78
	%X According to the existing literature, companies manage analysts’ expectations of their future earnings by issuing pessimistic
earnings guidance to meet the expectations. Consequently, one could expect that markets price this pessimistic bias in advance and penalize companies more for lowering the guidance than reward for beating the guidance. In this paper we confirm this empirically. In addition we show that although guidance revisions have a statistically significant relation to stock returns, that is not the case with the actual earnings surprise. Reason for this could be that, after the annual earnings report also information on future earnings power is given at the same time.

	%P 1889 - 1895