Are management's prospective comments indicative of companies' future performance?

Abstract

This project assesses the association between the nature of Management's Prospective Comments (MPC) published in the annual reports of companies listed on the Mainboard of the Singapore Stock Exchange (SES). and the companies" subsequent year performance. As there had not been many previous studies done on the reliability of MPC in the Singapore context, we believe that it would be a fruitful attempt to pursue a research on this issue. Two major analyses were done in this study. The first analysis was based on a sample of 82 companies which were listed for the year of selection between the years 1988 to 1993. The 82 companies were grouped based on their income status in the base year (loss-making or profit-making) for the analysis. The second analysis was based on a sample of 152 companies, all of which were listed in the year 1993 alone. A statistical research design was adopted to perform empirical tests on these 2 sets of samples.