The Impact of Economic Fluctuations on Earnings Forecasts

Prior studies in the area of management forecasts contain a common characteristic, they make no distinction as to the economic cycle of the U.S. when assessing voluntary earnings disclosures. This research tests whether voluntary earnings disclosures released during periods of an economic downturn differ from disclosures released during periods of economic expansion. In terms of bias and information content, findings suggest that forecasts tend to significantly differ during these distinctly different periods. With the U.S. in the grip of what may be a protracted recessionary period, these findings have practical and important implications for users and disseminators of forecast information