Description

This book emphasizes the importance that the information disclosed in the financial markets have in expectations formation. Investors' decisions are based on information disclosed by managers and analysts. Analysts are an important resource of information in financial market because they are specialists in certain sectors and have substantiated information on firms. This work assumes that analysts are a reasonable proxy for market expectations. The study also highlights the earnings and expectations management as mechanisms that CEOs could use in order to meet or beat market expectations and achieve a market premium through stocks valuation. Results show that market rewards firms that present earnings above market expectations and that managers turn to their privileged information to manipulate market expectations.