This paper examines the stock price effects of alternative types of ma
nagement earnings forecasts. Beyond deciding whether to disclose forec
asts, managers must decide whether to issue a point projection or a mo
re qualitative estimate (e.g., a bounded range), and whether to projec
t interim or annual earnings or both. Our empirical tests assess diffe
rences in the information content of management earnings forecasts tha
t differ by form and horizon. Our tests provide a comprehensive invest
igation of the price effects of these alternative forecast disclosure
types. While an extensive literature exists on the relation between ma
nagement forecasts and stock prices, most previous studies examine onl
y point and range forecasts of annual earnings (e.g., Penman 1980; Aji
nkya and Gift 1984, Waymire 1984; McNichols 1989; Pownall and Waymire
1989). Exceptions include Lev and Penman (1990), Patell (1976), and Ba
ginski et al. (1993). Lev and Penman (1990) include lower and upper bo
und forecasts for part of their sample period, but do not examine thes
e disclosure forms separately. Patell (1976) provides evidence on mean
price changes associated with a sample of annual minimum and maximum
forecasts. Baginski et al. (1993) examine alternative forecast forms.
Prior analyses of managers' disclosure incentives speculate that inves
tors may condition their assessment of forecast information on disclos
ure form and horizon. For instance, King et al. (1990) suggest that fo
recast disclosures emerge as voluntary managerial actions to reduce co
stly information asymmetry in capital markets. Under the ''expectation
s adjustment'' hypothesis, managers have incentives to acquire and mai
ntain a reputation for credible disclosure. Rational investors recogni
ze that disclosure quality varies systematically by disclosure form an
d will discount qualitative projections or those issued with longer ho
rizons. Policy debates on mandatory disclosure of qualitative informat
ion, such as the recent SEC debates over the content of ''Management D
iscussion and Analysis'' disclosures, and deliberations on forecast di
sclosure in the 1970s (see King et al. 1990), also suggest a need for
evidence on the information content of qualitative prospective disclos
ures and alternative forms of forecasts.1 Our primary tests are based
on a sample of 1,252 forecasts disclosed by 91 firms between July 1, 1
979 and December 31, 1987. Several conclusions emerge from these tests
. First, forecast disclosures remain highly informative even when incl
uding other disclosure types not analyzed in prior studies. Second, fo
recasts are less informative than earnings announcements for our full
sample, a finding that is inconsistent with earlier results in Pownall
and Waymire (1989). Third, differences across forecast forms are not
significant at conventional levels. Fourth, interim forecasts are sign
ificantly more informative than annual projections. This result is dri
ven largely by maximum forecasts, which are highly informative and mor
e frequent in the interim forecast subsample. We document several addi
tional regularities that may be of interest to researchers. First, poi
nt and range annual forecasts comprise less than 20 percent of our sam
ple. This suggests that the incidence of voluntary management forecast
disclosure is possibly far greater than suggested by previous studies
. Second, range forecasts tend to be quite inaccurate ex post. Actual
earnings per share (EPS) fell outside the forecasted bounds in more th
an 50 percent of our range forecasts. Third, forecasts that are more q
ualitative tend to be issued over longer horizons. Minimum forecasts a
re issued over the longest horizons for our sample, and interim point
projections have the shortest horizons. Finally, extensions to our pri
mary tests provide some evidence that maximum forecasts have significa
nt negative price effects, and that for point forecasts, forecast revi
sions are highly informative.