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Question
Which of the following is true with respect to earnings guidance?
a) There is usually a change in total returns to shareholders in the first year that managers begin to offer earnings guidance.
b) It has been proven that earnings guidance can increase liquidity.
c) Firms that engage in earnings guidance have higher multiples such as enterprise value/EBITA.
d) When a company begins to issue earnings guidance, it does not change the likelihood of higher or lower volatility in its share price relative to companies that do not issue earnings guidance.
Answer
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