Understanding the decision-making processes of investors using management earnings guidance information

Purpose Management earnings guidance is a form of voluntary disclosure that is an important topic in accounting research related to investor judgment and decision-making (JDM). The purpose of this study is to adapt prior research on guidance and investor JDM by integrating aspects of both guidance content and guidance provision. Using semi-structured interviews, this study corroborates evidence found by prior studies, while also extending knowledge about investor JDM when integrating the concepts of guidance news and the impact of COVID-19. Design/methodology/approach This study uses task-based, semi-structured interviews of non-professional investors where they make investment decisions based on given guidance information. Both deductive and inductive coding are used to carry out thematic analysis of the interviews. Findings Results of the semi-structured interviews corroborated prior studies, and several new themes emerged when combining the new elements of guidance content, including the importance of uncertainty as a decision-making factor and a shift in focus to analyst forecasts over guidance when the concept of guidance news was introduced. Originality/value There are no known studies that have explored the joint impact of guidance content and guidance provision on investor JDM in a qualitative sense. This study adapts guidance provision elements of a prior study and adds elements of guidance content to see how they jointly impact investor JDM.