The impact of managers expectations stickiness on future stock returns

Abstract

Predicting stock returns and securities pricing has always been one of the most important issues for financial marketers. The information provided by managers in corporate financial statements helps investors make optimal decisions, the value of this information depends on their accuracy, the biases of managers misrepresent the information, and cause inaccurate forecasts and thus decision making. It goes wrong. Choosing to invest regardless of managers' bias leads to wasted resources and incorrect decision making. The purpose of the present study is to study the impact of managers' expectations on the stock returns. In this study, stock returns were calculated using Fama and French three-factor model. Research hypotheses were tested using data from 178 companies over a 7-year period from 2011 to 2018 using multivariate regression and combined data. According to the results of the statistical analysis, there is a significant relationship between the expectations of managers and the stock return at 95% confidence level.