Business Commons^™

Guidance Frequency And Guidance Properties: The Effect Of Reputation-Building And Learning-By-Doing, Sanjeev Bhojraj, Robert Libby, Holly I. Yang

Research Collection School Of Accountancy

Different firms issue earnings guidance at dramatically different rates. We suggest that frequent guiders more likely represent a type of firm that is attempting to develop a reputation for enhanced disclosures through their guidance issuances. Furthermore, the desire to build a reputation and the opportunities to learn provided by issuing more frequent guidance should translate into frequent guiders providing higher quality guidance than occasional guiders. We examine our hypotheses in three stages. First, we find that guidance frequency is positively correlated with variables associated with reputation with capital market participants and reputation in product and labor markets. Second, our cross-sectional …