Management Forecasting Behavior Following Public News Events
By Gurvinder Sandhu, Gil Sadka, Sivaramakrishnan K
Citation
Sandhu, Gurvinder., Sadka, Gil., K, Sivaramakrishnan. (2025). Management Forecasting Behavior Following Public News Events .
Copyright
2025
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Abstract
We examine how managers adapt their disclosure behavior in response to (public) news shocks not anticipated by them. The extent to which such events would affect subsequent disclosure is a function of the nature of the news---whether it represents ``good'' or ``bad'' news, and whether the news is industry-wide or firm-specific. Appealing to extant disclosure theories, we posit that firm-level and industry-level news events have different implications for the forecasting behavior of firms. We identify firm-level and industry-level news shocks from quarterly stock-returns data and find that the average firm is less likely to issue a forecast if it is a firm-level shock (positive and negative). However, we find a positive association between industry-level shock (positive and negative) and managers’ forecasting propensity. In addition, firms show a greater propensity to meet or exceed analyst consensus following positive shocks and to report a shortfall following negative shocks (firm- and industry-level).

Gurvinder Sandhu is an Assistant Professor of Accounting at the Indian School of Business (ISB). He holds a PhD in Management Science from the University of Texas at Dallas. He also holds an MBA from Melbourne Business School (University of Melbourne) and a B.Com from Kurukshetra University.

Professor Sandhu’s research explores financial institutions, credit markets, and firms’ voluntary disclosures. His empirical work looks at what forces shape banks’ loan portfolios. He has developed a bank diversification measure that captures how diversified banks are in their commercial loan portfolio.

His research has been accepted at various academic conferences, including the American Accounting Association and the European Accounting Association. His teaching interests lie in financial accounting, specifically financial statement analysis and introductory financial accounting.

Gurvinder Sandhu
Gurvinder Sandhu