Stock Return or Sales Growth? Multiple Performance Feedback and Strategic Investments Under Securities Analysts’ Earnings Pressure

Pressure to meet or beat earnings forecasts from securities analysts leads managers of publicly traded firms to improve short‐term earnings by cutting strategic investments at the expense of long‐term competitiveness. Drawing on the behavioral theory of the firm, we explore how different dimensions of performance feedback moderate managerial responses to this pressure. We find that the negative impact of earnings pressure on a firm’s strategic...