Employee Quality and Quality Forecast Management Earnings

Abstract

Objective:The results of recent studies propound the view that employees play a pivotal role in the corporate operations as it is assumed that highly educated employees provide managers with more informative information; which in turn, the increased quality of the managers' information will lead to an improved earnings prediction. The present study sets out to investigate the association between the employee quality and the quality of the managers` earnings forecast in the firms listed in Tehran Stock Exchange, during the period 2013-2017. Method: In doing so, the education level is adopted as the proxy for employee quality. Besides, the management earnings forecast errors and accuracy indices are employed to measure the quality of managers` earnings forecast. The research hypotheses are built upon a sample of 84 listed firms and then tested using the multivariate regression model, based on panel data. Results:The findings reveal that there is a significant negative correlation between employee quality and earnings forecast error. Furthermore, there is a significant positive correlation between employee quality and earnings prediction accuracy. In other words, the quality of the company's employee improves the quality of the managers` earnings forecast.

Keywords

• employee quality
• employees’ education level
• earnings forecast
• earnings forecast accuracy
• earnings forecast error