Managers' equity-based compensation and soft-talk management cash flow forecasts

We investigate whether managers use their discretion in cash flow forecasts to influence the value of their equity-based compensation. We find that managers are more likely to issue soft-talk cash flow forecasts when their equity-based compensation is higher. This association is affected by the news in management earnings forecasts and the propensity of accrual-based earnings management. Further analyses show that the documented association is less pronounced after the Securities and Exchange Commission issued Regulation G, for firms with chief executive officers who are older or in their later tenure. Our results are robust to addressing potential correlated omitted variables bias.