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CEO career concerns and expectations management

Elio Alfonso (The University of Tampa, Tampa, Florida, USA)
Li-Zheng Brooks (Texas A&M International University, Laredo, Texas, USA)
Andrey Simonov (University of Hawaiʻi at Hilo, Hilo, Hawaii, USA)
Joseph H. Zhang (The University of Memphis, Memphis, Tennessee, USA)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 15 July 2019




The purpose of this paper is to examine the impact of career concerns on CEOs’ use of expectations management to meet or beat analysts’ quarterly earnings forecasts. The authors posit that early career-stage CEOs are less (more) likely to use expectations management than are late career-stage CEOs if the market views expectations management as an opportunistic strategy (efficient process) due to reputational capital concerns.


The authors obtain data for CEO career stages and CEO compensation from ExecuComp, analyst earnings forecasts from the detailed I/B/E/S database, financial statement data from quarterly Compustat and stock returns from the daily CRSP database over the period 1992–2013.


The results are consistent with the opportunistic hypothesis and early-stage CEOs seeking to build reputational capital by avoiding the perception of engaging in an inefficient managerial strategy. The authors find robust evidence that late career-stage CEOs are more likely to engage in expectations management than early career-stage CEOs. Furthermore, the authors show that late career-stage CEOs tend to employ expectations management to boost the value of their equity-based compensation.

Research limitations/implications

The findings have important implications because the authors document a different implication of the “horizon problem” related to CEOs’ opportunistic forecasting behavior and the manipulation of analysts’ forecasts for CEOs who are approaching retirement.

Practical implications

The results have practical implications for analysts who provide earnings forecasts for firms whose CEOs are in early or late career stages and for investors who use such analysts’ forecasts in firm valuation models.


The authors contribute to the literature on expectations management by documenting how reputational incentives of CEOs affect the likelihood that managers engage in expectations management. The authors show that an important managerial incentive to engage in expectations management is CEO career concerns. Furthermore, the authors show that CEOs who are in early stages of their careers choose not to engage in expectations management due to the market’s perceived degree of opportunism pertaining to this strategy.



Alfonso, E., Brooks, L.-Z., Simonov, A. and Zhang, J.H. (2019), "CEO career concerns and expectations management", Journal of Applied Accounting Research, Vol. 20 No. 3, pp. 267-289.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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