The effects of analyst forecasts and earnings trends on perceptions of management forecast credibility Lisa M. Gaynor a , Andrea S. Kelton b a School of Accountancy, University of South Florida, Tampa, FL, USA b Schools of Business, Wake Forest University, Winston-Salem, NC, USA Abstract We examine whether analyst forecasts influence investors’ perceptions of the credi- bility of a good news management earnings forecast. We hypothesize that the effect of analyst forecasts will depend on whether the analyst forecast confirms manage- ment’s forecast and the extent to which management’s forecast is consistent with the prior earnings trend. Findings indicate that the positive effect of a confirming analyst forecast is greater when the management forecast is trend inconsistent than when it is trend consistent. The negative effect of a disconfirming analyst forecast does not differ based on management forecast trend consistency. Key words: Analyst forecast; Management earnings forecast; Disclosure credibi- lity; Investor expectations JEL classification: M41 doi: 10.1111/j.1467-629X.2012.00505.x We thank Anna Cianci, Shana Clor-Proell, Sukari Farrington, Frank Hodge, Lisa Koo- nce, Molly Mercer, Norma Montague, Sundaresh Ramnath, Jane Thayer, Shankar Venk- ataraman, Julie Wayne, Ya-Wen Yang, Tina Zamora and particularly, Steven Cahan (the Editor) and two anonymous referees for helpful comments and suggestions. We also acknowledge comments provided by the reviewers and participants of the 2010 AAA Annual Meeting, the 2009 ABO Research Conference, and the New England Behavioral Accounting Research Series. We would like to express our gratitude to Robin Dillon- Merill, Dawn Porter, and David Post for assistance in recruiting participants. Finally, we thank Lee Kersting, Norma Montague and Nicole Siroonian for research assistance. Pro- fessor Kelton gratefully acknowledges financial support from the Wake Forest School of Business. Received 26 July 2011; accepted 14 June 2012 by Steven Cahan (Editor-in-Chief). Ó 2012 The Authors Accounting and Finance Ó 2012 AFAANZ Accounting and Finance