Does company reputation matter for voluntary disclosure quality? evidence from management earnings forecasts

This study explores the association between company reputation and voluntary disclosure quality as proxied by the issuance and characteristics of management earnings forecasts. We follow prior literature and proxy for company reputation using measures based on Fortune Magazine’s “America’s Most Admired Companies” List. We find that companies with higher reputations are more likely to issue earnings forecasts and forecast earnings more frequently. Among companies on the Most Admired List, we also find that earnings forecasts issued by higher-reputation companies are more accurate than those issued by lower-reputation companies. Sensitivity analyses show that the changes in management forecasting behaviors can be attributed to changes in company reputation and are unlikely to result from changes in managerial ability. Our study contributes to the voluntary disclosure literature by identifying a unique factor that motivates companies to disclose better forward-looking information and to the reputation literature by documenting that company reputation impacts information transparency.