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A Catering Theory of Earnings Guidance: Empirical Evidence and Stock Market Implications

Nils Lohmeier & Hannes Mohrschladt

Journal of Financial and Quantitative Analysis2026https://doi.org/10.1017/s0022109026102580article
FT50AJG 4ABDC A*
Weight
0.50

What the paper says

We propose and test a catering theory of earnings guidance. As predicted by our model, managers cater to reference point-dependent investor preferences by issuing excessively optimistic earnings forecasts if their investors have experienced poor stock returns. Moreover, earnings guidance is most biased when managers strongly discount future outcomes, when the stock’s payoff uncertainty is high, and when managers face low costs for issuing inaccurate forecasts. Catering via earnings guidance succeeds in moving stock market prices and induces mispricing which is partially corrected around the corresponding final earnings announcement.

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https://doi.org/https://doi.org/10.1017/s0022109026102580

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@article{nils2026,
  title        = {{A Catering Theory of Earnings Guidance: Empirical Evidence and Stock Market Implications}},
  author       = {Nils Lohmeier & Hannes Mohrschladt},
  journal      = {Journal of Financial and Quantitative Analysis},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1017/s0022109026102580},
}

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A Catering Theory of Earnings Guidance: Empirical Evidence and Stock Market Implications

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.