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The purpose of this paper is to examine the impact of career concerns on CEOs’ use of expectations management to meet or beat analysts’ quarterly earnings forecasts. The authors posit that early career-stage CEOs are less (more) likely to use expectations management than are late career-stage CEOs if the market views expectations management as an opportunistic strategy (efficient process) due to reputational capital concerns.

The authors obtain data for CEO career stages and CEO compensation from ExecuComp, analyst earnings forecasts from the detailed I/B/E/S database, financial statement data from quarterly Compustat and stock returns from the daily CRSP database over the period 1992–2013.

The results are consistent with the opportunistic hypothesis and early-stage CEOs seeking to build reputational capital by avoiding the perception of engaging in an inefficient managerial strategy. The authors find robust evidence that late career-stage CEOs are more likely to engage in expectations management than early career-stage CEOs. Furthermore, the authors show that late career-stage CEOs tend to employ expectations management to boost the value of their equity-based compensation.

The findings have important implications because the authors document a different implication of the “horizon problem” related to CEOs’ opportunistic forecasting behavior and the manipulation of analysts’ forecasts for CEOs who are approaching retirement.

The results have practical implications for analysts who provide earnings forecasts for firms whose CEOs are in early or late career stages and for investors who use such analysts’ forecasts in firm valuation models.

The authors contribute to the literature on expectations management by documenting how reputational incentives of CEOs affect the likelihood that managers engage in expectations management. The authors show that an important managerial incentive to engage in expectations management is CEO career concerns. Furthermore, the authors show that CEOs who are in early stages of their careers choose not to engage in expectations management due to the market’s perceived degree of opportunism pertaining to this strategy.

Using Chinese A-share listed firms between 2007 and 2020 with 21,380 observations, we aim to examine the impact of cross-ownership on firms’ innovation output and explore the underlying mechanisms.

To test the influence of cross-ownership on firms’ innovation output, this paper constructs an ordinary least square regression model. The explained variables are firms’ innovation output, including the total number of patent applications (Apply) and the number of invention patent applications (Apply_I). Considering the long period of patent R&D, we take the value of the explained variables in the following year for regression. Cross-ownership (Cross) is the explanatory variable; Control is the control variable; and ε is the regression residual term.

We find that cross-ownership significantly promotes corporate innovation output, indicating that cross-owners play an important role in “collaborative governance.” This finding remains unchanged after conducting a series of robustness tests. We also find that cross-ownership contributes to innovation output mainly through two plausible channels: the relaxation of financing constraints and reducing both types of agency costs. Further analysis shows that cross-ownership has a more pronounced influence on innovation output in those firms with higher equity restriction ratios and facing more competitive markets. Moreover, cross-ownership has a profound impact on firms’ innovation quality and innovation efficiency, thereby increasing firm value.

This study provides important policy implications. First, cross-owners should actively play their resource and supervision advantages to improve firms’ long-term development capability through the “collaborative governance” effect. Second, listed companies in China should be fully aware of the value of the cross-ownership and use the cross-ownership as a bridge to strengthen the cooperative relationship with firms in the same portfolio. Meanwhile, they need to pay attention to cross-ownership’s “collaborative governance” effect to provide an impetus for the healthy development of enterprises. Finally, government regulators should maintain appropriate supervision of the cross-ownership linkage in the market.

Our findings show that cross-ownership significantly contributes to firms’ innovation output, indicating that cross-owners play the role of “collaborative governance.” While paying attention to the collusion effect of the cross-ownership, they shall not ignore its governance effect, for example, the promotion effect on the innovation level. Government regulators should appropriately supervise the cross-ownership linkage, which is conducive to maintaining the market order and driving the healthy development of the capital market.