HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS

We examine the information content of strategic-plans’ long-term growth targets (SPLTG) and of strategic-plans’ forecast horizons (SPFH). Using a sample of 224 strategic plan presentations by Italian listed companies during the period 2002–2018, we provide evidence that the SPLTG conveys credible an...

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Main Author: GIUSEPPE DI MARTINO
Format: Article
Language:English
Published: World Scientific Publishing 2019-12-01
Series:Journal of Financial Management, Markets and Institutions
Subjects:
Online Access:http://www.worldscientific.com/doi/epdf/10.1142/S2282717X1950004X
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author GIUSEPPE DI MARTINO
author_facet GIUSEPPE DI MARTINO
author_sort GIUSEPPE DI MARTINO
collection DOAJ
description We examine the information content of strategic-plans’ long-term growth targets (SPLTG) and of strategic-plans’ forecast horizons (SPFH). Using a sample of 224 strategic plan presentations by Italian listed companies during the period 2002–2018, we provide evidence that the SPLTG conveys credible and useful information to investors. We also assume that longer forecast horizons are more uncertain and we find that stock price reaction is negatively associated with long-term forecast horizons. Then, we investigate whether SPLTG presented in conjunction with long-term SPFH are perceived as less credible. The findings document that investors perceive long-term growth targets as credible regardless of the SPFH length. Our study contributes to the current debate on the use of strategic plans as comprehensive disclosure able to provide credible and useful information.
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spelling doaj.art-5aabd817e1954e6497872f794a45c21b2022-12-21T18:18:21ZengWorld Scientific PublishingJournal of Financial Management, Markets and Institutions2282-717X2019-12-01721950004-11950004-3310.1142/S2282717X1950004X10.1142/S2282717X1950004XHOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMSGIUSEPPE DI MARTINO0University of Bari Aldo Moro, Department of Economics, Management and Business Law, Largo Abbazia Santa Scolastica, 53, 70124 Bari, ItalyWe examine the information content of strategic-plans’ long-term growth targets (SPLTG) and of strategic-plans’ forecast horizons (SPFH). Using a sample of 224 strategic plan presentations by Italian listed companies during the period 2002–2018, we provide evidence that the SPLTG conveys credible and useful information to investors. We also assume that longer forecast horizons are more uncertain and we find that stock price reaction is negatively associated with long-term forecast horizons. Then, we investigate whether SPLTG presented in conjunction with long-term SPFH are perceived as less credible. The findings document that investors perceive long-term growth targets as credible regardless of the SPFH length. Our study contributes to the current debate on the use of strategic plans as comprehensive disclosure able to provide credible and useful information.http://www.worldscientific.com/doi/epdf/10.1142/S2282717X1950004Xforecast horizoninformation contentlong-term growth forecaststrategic planvalue relevance
spellingShingle GIUSEPPE DI MARTINO
HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
Journal of Financial Management, Markets and Institutions
forecast horizon
information content
long-term growth forecast
strategic plan
value relevance
title HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
title_full HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
title_fullStr HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
title_full_unstemmed HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
title_short HOW DO INVESTORS PERCEIVE LONG-TERM GROWTH TARGETS AND FORECAST HORIZONS IN STRATEGIC PLANS? EVIDENCE FROM ITALIAN FIRMS
title_sort how do investors perceive long term growth targets and forecast horizons in strategic plans evidence from italian firms
topic forecast horizon
information content
long-term growth forecast
strategic plan
value relevance
url http://www.worldscientific.com/doi/epdf/10.1142/S2282717X1950004X
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