What's my target? Individual analyst forecasts and last-chance earnings management

Erik L. Beardsley, John R. Robinson, Paul A. Wong

Research output: Contribution to journalArticlepeer-review


Kirk, Reppenhagen, and Tucker (2014) find that investors use individual analyst forecasts as additional earnings benchmarks. We investigate whether executives manage earnings to beat these individual benchmarks. Using year-end effective tax rate (ETR) manipulation as our setting, we find that firms decrease ETRs from 3rd to 4th quarter to meet or beat a greater percentage of individual forecasts. We also find some evidence that firms use incremental ETR changes to meet forecasts by key analysts. After controlling for the distance to the nearest forecast, our evidence shows that firms are more likely to beat an incremental forecast with a decrease in ETR compared to missing an incremental forecast with an increase in ETR. Our study highlights the strategic nature of earnings management by providing evidence that managers consider individual forecasts to calibrate earnings management decisions.

Original languageEnglish (US)
Article number101423
JournalJournal of Accounting and Economics
Issue number1
StatePublished - Aug 2021
Externally publishedYes


  • Analyst forecasts
  • Analyst heterogeneity
  • Consensus forecast
  • Earnings management
  • Forecast dispersion
  • Tax expense

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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