TITLE

Management Forecast Characteristics: Effects on Venture Capital Investment Screening Judgments

AUTHOR(S)
Fleming, Damon M.
PUB. DATE
June 2009
SOURCE
Behavioral Research in Accounting;2009, Vol. 21 Issue 2, p13
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This study examines the effects of the quantification and precision of forecast disclosures in new venture proposals on 62 experienced venture capitalists' initial investment screening judgments. It was predicted that including quantitative estimates for key components of earnings forecasts in the proposal enhances its persuasive power and, thus, more favorable investment screening judgments. It was also predicted that while quantification can increase the persuasive power of forecast disclosures, it may also evoke expectancies about forecast precision and that violation of these expectancies adversely affects investment screening judgments. Experimental results generally support the research predictions and additional analyses reveal that perceptions of management's credibility mediate the main effect of forecast quantification. Combined, these results provide evidence that managers should carefully consider the information content and consistency of forecast disclosures.
ACCESSION #
43248469

 

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