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Article
Publication date: 1 February 1993

Richard Dobbins

Sees the objective of teaching financial management to be to helpmanagers and potential managers to make sensible investment andfinancing decisions. Acknowledges that…

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5155

Abstract

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

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Management Decision, vol. 31 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 January 2000

WEN‐HSI LYDIA HSU, David Hay and Sidney Weil

This study examines the accuracy and bias of profit forecasts disclosed in prospectuses by New Zealand companies for initial public offerings during the period 1987 to…

Abstract

This study examines the accuracy and bias of profit forecasts disclosed in prospectuses by New Zealand companies for initial public offerings during the period 1987 to 1994. The results show that profit forecasts in this period are, on average, more accurate titan those disclosed prior to 1987, which were examined in prior studies. However, the results reject the null hypothesis that profit forecasts are accurate. In examining forecast bias, the evidence shows that the forecasts are, on average, somewhat pessimistic, but not sufficiently to reject the hypothesis that profit forecasts are unbiased. Tests of the determinants of error show that larger companies make more accurate forecasts, and forecasts made in the year 1987 are less accurate than in other years. Tests of the determinants of bias show that forecasts made in 1987 are also more optimistic, and that companies with longer trading histories and pessimistic forecasts make less biased forecasts. Forecast period and industry type are not significantly related to error or bias.

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Pacific Accounting Review, vol. 12 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 July 2004

Stephen J. Ciccone and Ahmad Etebari

This study analyzes trends in analyst forecast properties from 1987 through 1998 in the United States and seven Pacific Rim countries: Australia, New Zealand, Taiwan, Hong…

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396

Abstract

This study analyzes trends in analyst forecast properties from 1987 through 1998 in the United States and seven Pacific Rim countries: Australia, New Zealand, Taiwan, Hong Kong, Japan, South Korea, and Thailand. Analyst forecast properties in the United States have become less dispersed, more accurate, and less optimistic during the sample period. Similar trends exist in Australia and New Zealand, but not in the other sample countries. In contrast, the forecast property trends of most Asian countries are the exact opposite. For example, in Japan and Korea, forecast dispersion, forecast error, and optimism all significantly increase over the sample period. The results suggest that Asian firms do not play the U.S.‐style earnings game in which managers guide analysts toward a certain target number and then report earnings that beat the target.

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Managerial Finance, vol. 30 no. 7
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 18 July 2016

Kathleen Campbell Garwood, Alicia Graziosi Strandberg and Nicolle Clements

In this chapter, inventory and sales data from a small business with seven showrooms are evaluated to forecast future sales and maximize total profits. In each showroom…

Abstract

In this chapter, inventory and sales data from a small business with seven showrooms are evaluated to forecast future sales and maximize total profits. In each showroom, three major brands of ceiling fans are sold and a limited amount of products from each brand are displayed. Each showroom varies in their sales volume, display capacity, and profit margins. Using historical data, the optimal display configuration was determined for each showroom; that is, the proportion of products from each brand to display in the limited display grid, while acknowledging existing constraints. Next using the optimal displays, profit for the next year is forecasted. Finally a comparison is made between actual and forecasted results and profits pre and post the optimal product display.

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Advances in Business and Management Forecasting
Type: Book
ISBN: 978-1-78635-534-8

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Article
Publication date: 22 November 2011

Jacqueline Birt and Greg Shailer

Changes in Australian segment reporting standards over the last decade changed the required disaggregation of segment information. The purpose of this paper is to…

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2730

Abstract

Purpose

Changes in Australian segment reporting standards over the last decade changed the required disaggregation of segment information. The purpose of this paper is to investigate whether increased disaggregation has implications for users' confidence in decisions based on segment reports and perceptions of segment reporting usefulness.

Design/methodology/approach

Using an experiment based on the differences between the original AASB 1005 and the more detailed requirements of AASB 114, the authors test whether segment report users' confidence in forecasting and their perceptions of segment report usefulness differ between the different information sets provided under these standards.

Findings

It was found that the more disaggregated or finer reports based on AASB 114 provide significantly more confidence to users, compared to the coarser segment reports based on the original AASB 1005, but this is not associated with differences in segment report usefulness scores.

Research limitations/implications

The authors' experiment is based on AASB 1005 and AASB 114 and the results cannot be generalized to differences with other reporting standards. Examination of differences in recently released AASB 8 may reveal different implications for users' confidence and perceptions of usefulness. More generally, other tests of usefulness are needed to confirm whether opinions of usefulness that are not confirmed by decision‐making practices provide a reliable basis for determining usefulness.

Practical implications

By confirming that decision makers' confidence can be increased by the provision of finer information sets, the authors' results have practical implications for accounting standard setting.

Originality/value

By testing the impact of report differences on user decision confidence, the paper addresses a previously overlooked issue.

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Accounting Research Journal, vol. 24 no. 3
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 1 December 2000

Niamh Brennan and Sidney J. Gray

Profit forecasts are rarely disclosed in the UK except in prospectuses, circulars and during takeover bids. There are few regulations governing the content of profit

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1121

Abstract

Profit forecasts are rarely disclosed in the UK except in prospectuses, circulars and during takeover bids. There are few regulations governing the content of profit forecasts. Under stock exchange rules these forecasts must be reported on by both reporting accountants and the merchant bankers advising on the deal. The format of the forecasts is at the discretion of individual companies. This paper summarises the regulations, including professional pronouncements, governing accountants’ reports on profit forecasts. Practical examples of such accountants’ reports extracted from 250 profit forecasts published during 701 UK takeover bids in the period 1988 to 1992 are reproduced and discussed. These examples provide useful precedent material for practitioners involved in reporting on a profit forecast. The paper concludes with a discussion of policy issues and suggestions for policy makers.

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Managerial Auditing Journal, vol. 15 no. 9
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 June 1976

A NEW word is being thrown at management from every direction. It is Participation. Just what does it mean, what does it entail? To many board members it means little but…

Abstract

A NEW word is being thrown at management from every direction. It is Participation. Just what does it mean, what does it entail? To many board members it means little but a confounded nuisance. Not only in private or public companies; also some of the nationalised industries To workers it can mean many different things: the realisation of a dream; or a nightmare. For the fact must be faced: participation in management and direction must entail participation in responsibility. So it is sharing blame as well as grabbing credit. Unfortunately even apportioning blame doesn't keep a sinking company afloat; and the end result is the same whether the inexpert direction came from one end of the industry or the other. Inefficiency has to be paid for by bitter experience.

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Work Study, vol. 25 no. 6
Type: Research Article
ISSN: 0043-8022

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Article
Publication date: 1 February 2016

Tanweer Hasan, Muliaman Hadad and Kamran Ahmed

The purpose of this paper is to measure the accuracy of management profit forecast in initial public offerings (IPO) prospectuses and investigate the determinants of any…

Abstract

Purpose

The purpose of this paper is to measure the accuracy of management profit forecast in initial public offerings (IPO) prospectuses and investigate the determinants of any observed forecast error in Indonesia.

Design/methodology/approach

A sample of 105 Indonesian IPO firms over a ten-year period, 1999-2008, is used in the present study. The accuracy of management profit forecasts, or forecast errors, in IPO prospectuses is calculated, following Lee et al. (2006), over the ten-year sample period. Then, a multivariate model, following the extant literature, is used to identify the determinants of any observed forecast error in Indonesia.

Findings

A mean (median) forecast error of 19 percent (9 percent) is reported over the entire sample period. Multivariate analysis shows that, among the explanatory variables used in the present study, forecast horizon and management optimism seem to be the most significant determinants of forecast error in Indonesia.

Research limitations/implications

The ordinary, specifically small, investors in Indonesia lack the sophistication needed to evaluate new issues while alternative independent sources of information or analysis on IPOs are virtually non-existent. Consequently, whether the forecasts made by the managers during IPOs are reliable or not is of particular importance in Indonesia.

Originality/value

Indonesia is a significant emerging market in Asia. However, to date, no published work has examined the accuracy of management profit forecasts or forecast errors in this market. The present study attempts to fill this gap in the literature and is the first to capture the magnitude/degree of forecast accuracy or error and investigate the determinants of the documented forecast error in Indonesia using a sample of 105 IPO firms over the period 1999 through 2008.

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Journal of Accounting in Emerging Economies, vol. 6 no. 1
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 6 February 2007

H. Chan, R. Faff, Y.K. Ho and A. Ramsay

The purpose of this paper is to assess management earnings forecasts in a continuous disclosure environment.

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1205

Abstract

Purpose

The purpose of this paper is to assess management earnings forecasts in a continuous disclosure environment.

Design/methodology/approach

A large sample of hand checked Australian management earnings forecasts are examined. These data are analysed using a series of logistic regressions. Hypotheses are proposed and tested based on Skinner's litigation cost hypothesis. Increases in non‐routine management earnings forecasts post‐2000; and increases in the proportion of such forecasts that contain bad news are predicted. The relationship between forecast specificity and forecast news content is investigated.

Findings

It was found that, post‐2000, legislative changes and increased enforcement action by ASIC were followed by increased disclosure of non‐routine management earnings forecasts. For routine forecasts, no significant increase in forecast disclosure is observed. This result is consistent with Skinner as is the finding that the increased disclosure is only apparent for bad news non‐routine forecasts. For the second objective, evidence was found that the larger the gap between market expectations and actual performance the more specific the forecast, but only for bad news forecasts.

Originality/value

The study extends the small amount of research investigating the characteristics of management earnings forecasts. It also provides an assessment of the effectiveness of efforts by ASIC to ensure that management meet their continuous disclosure obligations.

Details

Pacific Accounting Review, vol. 19 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 November 1997

R. Dobbins and B.O. Pettman

A self‐help guide to achieving success in business. Directed more towards the self‐employed, it is relevant to other managers in organizations. Divided into clear sections…

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11038

Abstract

A self‐help guide to achieving success in business. Directed more towards the self‐employed, it is relevant to other managers in organizations. Divided into clear sections on creativity and dealing with change; importance of clear goal setting; developing winning business and marketing strategies; negotiating skills; leadership; financial skills; and time management.

Details

Journal of Management Development, vol. 16 no. 8
Type: Research Article
ISSN: 0262-1711

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