http://www.loc.gov/mods/v3 http://www.loc.gov/standards/mods/v3/mods-3-2.xsd
effect of multinationality on management earnings forecasts
This study examines the relationship between a firm's degree of multinationality and its managers' earnings forecasts. Firms with a high degree of multinationality are subject to greater uncertainty regarding earnings forecasts due to the additional risk resulting from the more complex multinational environment. Prior research demonstrates that firms that fail to meet or beat market expectations experience disproportionate market losses at earnings announcement dates. The complexities and greater uncertainty resulting from higher levels of multinationality are expected to be negatively associated with management earnings forecast precision, accuracy, and bias (downward versus upward). Results of the study are mixed. Regarding forecast precision, two measures of multinationality (foreign sales / total sales and the number of geographic segments) are significantly negatively related to management earnings forecast precision. This was the expected relationship. Regarding forecast accuracy, contrary to expectations, forecast accuracy is positively related to multinationality, with regard to the number of geographic segments a firm discloses. Regarding forecast bias, unexpectedly, two measures of multinationality (foreign sales / total sales and number of countries with foreign subsidiaries) are significantly positively related to more optimistic management earnings forecasts.
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