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This paper investigates whether voluntary management disclosure of earnings forecasts influences investors' long-term assessment of firm risk and firm value. The authors control for possible endogeneity between various firm-specific characteristics and the voluntary issuing of different types of management earnings forecasts by utilizing a two-stage Heckman treatment analysis. They find a significant negative relationship between the issuance of management earnings forecasts and a variety of risk measures including idiosyncratic risk, stock return volatility, beta, and bid-ask spreads suggesting the issuance of management earings forecasts reduces information asymmetry and thus reduces risk.
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