... – The authors expect that a more effective audit committee would be able to reduce managers’ propensity to use downward forecast guidance to avoid negative earnings surprises. Four committee characteristics are used to measure its effectiveness: independence, diligence, expertise and size. Findings...

...' propensity to use either downward forecast guidance or real earnings management as a substitute mechanism to avoid earnings surprises. Design/methodology/approach Following Barton and Simko, the paper uses the beginning balance of net operating assets relative to sales as a proxy for the balance sheet...