| Author: | Hian Heng Yeo, G. Ziebart, D. A. |
| Title: | The effect of self-selection bias on the testing of a stock price reaction to management's earnings forecasts |
| Journal: | Review of Quantitative Finance and Accounting
1995 : MAR, VOL. 5:1, p. 5-25 |
| Index terms: | PROFIT FORECASTING SHARE PRICES STATISTICAL METHODS |
| Language: | eng |
| Abstract: | This study examines the inferential bias due to the failure to control for self-selection when studying the market's reaction to management earnings forecasts. The analysis is conducted by controlling for self-selection and comparing the results to those obtained when self-selection is not controlled. This comparison suggests that the overall inference of a market reaction to the management forecast issuance does not change. However, the statistical significance declines when self-selection is considered. Since the issuance of a management forecast is an obvious self-selection, the results of this study suggest that self-selection should be considered and evaluated in quasi-experimental studies in accounting and finance. |
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