Problem Set 10
ACCT 3112 Accounting Data Management and Analytics
Prof. Doyeon Kim
Due: 17/11/2024 11:59pm
Why do managers provide voluntary disclosures?
Importing the necessary data
For this exercise, we will try to see what determines the managers’ incentives to provide
guidance. In order to do so, you will have to merge data fromIBESandCompustat. Here
are the steps to follow:
•Importibes.rds. This contains information on quarterly management guidance from
2013 to 2020. The unique identifier for this database isticker. You can find the
column details on WRDS.
•Since the unique firm identifier inCompustatisgvkey, you will need to usegvkey.rds
to linkgvkeyandticker.
•You will have to downloadquarterlydata from Compustat. Before downloading the
data, read through the problem set and think about which variables you want to
download.
Panel data from voluntary disclosure
We want to see whether managers provide guidance or not for every quarter. However, if the
managers do not guide, there would be no observations in the data. In order to take care
of this issue, we will create a new paneldataframeusingexpand.grid. Here is an example
below:
expand.grid(
x = 1:5,
y =c('a','b')
)
•Create a newdataframeusingexpand.grid. The columns should be firm identifiers
(eithertickerorgvkey) and year-quarters.
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•Get only theEPSestimates from the guidance data and merge them to the newly
createddatabaseabove. You should have a column likeguidancethat is populated
with0s or1s depending on whether the manager provided guidance or not.
•Lastly, merge the firm fundamentals fromCompustatthat you think have an effect on
managers’ incentives to provide guidance.
Analysis
•Run a logit regression, where the dependent variable represents whether the manager
discloses or not and the independent variables are a number of firm fundamentals that
you think will be important for the managers’ decision to provide guidance.
•Run a linear regression using the same regression model as above. Do your results
change (in terms of the direction of the coefficients)?
•Describe your results in words and/or using plots.
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