Abstract
ABSTRACTWe study the market reaction of Australian firms issuing management earnings forecasts (MEF). Specifically, we measure and distinguish between the immediate and post‐earnings announcement impact of MEF. Our analysis is conditioned on growth/value characteristics and news surprise and we test for asymmetric effects on these two conditioning variables. We find that the 3‐day returns following non‐routine bad news forecasts are significantly more negative for growth firms than value firms. No significant differences are found for good news forecasts. In the post‐earnings announcement period, both growth and value firms have significant negative post‐earnings announcement drift following non‐routine bad news forecasts but they are not significantly different from each other.
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