Business Life Cycle and Strategic Communication: Effects on Analysts’ Forecasts
Description
Objective: this study investigates the influence of organizational life cycle stages on the relationship between corporate voluntary disclosures and the accuracy of earnings forecasts made by financial analysts. Theoretical approach: information asymmetry, according to agency theory, generates conflicts between managers and investors. Complementarily, signaling theory suggests that the communication of private information can help bridge this gap. Financial analysts interpret these signals, aligning expectations, mitigating conflicts, and enhancing market decisions by reducing monitoring costs. Methods: a total of 472 annual reports and 1,723 observations from 61 companies listed on the B3 stock exchange (2010–2020) were analyzed using a checklist, descriptive statistics, group comparison tests, and Logit and OLS regressions. Results: the findings indicate that voluntary disclosure affects the accuracy of analysts' forecasts in distinct ways. The disclosure of strategic and performance information increases informational complexity, particularly during periods of growth and turbulence, reflecting challenges in aligning stakeholder interests. Conversely, voluntary disclosures related to social responsibility and sustainability facilitate understanding of the company's conditions, aiding analysts in contexts of greater uncertainty, such as during turbulence and decline stages of the organizational life cycle. Conclusion: the organizational life cycle moderates the relationship between voluntary disclosure and the quality of analysts' forecasts, underscoring the importance of managers tailoring their disclosure strategies to meet the informational demands of each stage, reducing uncertainties, and promoting better alignment with market interests.