Abstract
Abstract: We address the policy debate on whether replacing short-term earnings guidance with long-term earnings guidance reduces managerial myopia through reductions in accruals and real earnings management and excess investment in fixed assets. We employ two event samples to capture long-term guidance: a hand-collected sample of firms that issue earnings-guidance for three to five years ahead and a sample that stops issuing quarterly guidance but continues to issue annual guidance. Using a propensity-score matched design, we find no evidence that long-term guidance firms manage earnings less or are more efficient in their investment decisions. Taken together, our evidence is inconsistent with the view that long-term guidance mitigates managerial myopia.
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