Nonearnings Corporate Guidance


  • Hung-Yuan Richard Lu,

  • Jennifer Wu Tucker

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    • Hung-Yuan (Richard) Lu is an Associate Professor in the Mihaylo College of Business and Economics, California State University, Fullerton, CA. Jennifer Wu Tucker is an Associate Professor in the Fisher School of Accounting, Warrington College of Business Administration, University of Florida, Gainesville, FL.

  • We thank Nerissa Brown, Bill Christie (Editor), Patricia Dechow, Joel Demski, Vicki Dickinson, Rebecca Hann, Ben Lansford, Paul Madsen, Tom Omer, Bret Scott, Ed Swanson, Surjit Tinaikar, Shankar Venkataraman, Jim Vincent, Isabel Wang, two anonymous referees, and the workshop participants at the University of California at Berkeley, University of Florida, University of Southern California, Texas A&M University, and the 2009 American Accounting Association Annual Conference for comments; Jimmy Lee, Jerry Liu, Delius Mak, and Jie Zhou for research assistance; and Wayne Losano for editorial assistance. Jenny Tucker thanks the J. Michael Cook/Deloitte Professorship Foundation for financial support.


We examine nonearnings related disclosure and find that many firms voluntarily provided guidance on capital expenditure (CAPEX) and provided strategic plan disclosure (SPD) before recent proposals to increase nonearnings information disclosure. Furthermore, we find that firms with high long-term institutional ownership tend to provide both earnings and CAPEX guidance; that turnaround firms tend to provide SPD in lieu of earnings guidance; and growth firms tend to provide earnings guidance without SPD. Our results suggest that unconstrained firms make optimal disclosure decisions and that corporate guidance behaviors might not have contributed to earnings fixation and myopia in capital markets.