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High‐involvement work practices and analysts' forecasts of corporate earnings
Author(s) -
Benson George S.,
Young Susan M.,
Lawler III Edward E.
Publication year - 2006
Publication title -
human resource management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.888
H-Index - 94
eISSN - 1099-050X
pISSN - 0090-4848
DOI - 10.1002/hrm.20130
Subject(s) - earnings , newspaper , business , accounting , work (physics) , sample (material) , dissemination , stock (firearms) , best practice , annual report , economics , management , political science , advertising , mechanical engineering , chemistry , chromatography , law , engineering
Research has shown that high‐involvement work practices are positively related to corporate financial performance. However, it is unknown if investors are able to use information on high‐involvement practices to predict the performance of specific companies. In this study, we examine earnings forecasts for a sample of Fortune 1000 firms and find professional stock analysts consistently underestimated the earnings of firms that made greater use of high‐involvement practices during the 1990s. Based on data collected from newspaper articles and annual reports, we argue that these lower estimates resulted from a lack of information on innovative HR practices. Recommendations to managers for disseminating information on and leveraging highinvolvement HR practices are discussed. © 2006 Wiley Periodicals, Inc.