How Do Investors Perceive Long-Term Growth Targets and Forecast Horizons in Strategic Plans ? Evidence from Italian Firms

We examine the information content of strategic-plans' long-term growth targets (SPLTG) and of strategic-plans' forecast horizons (SPFH). Using a sample of 224 strategic plan presentations by Italian listed companies during the period 2002–2018, we provide evidence that the SPLTG conveys credible and useful information to investors. We also assume that longer forecast horizons are more uncertain and we ¯nd that stock price reaction is negatively associated with long-term forecast horizons. Then, we investigate whether SPLTG presented in conjunction with long-term SPFH are perceived as less credible. The ¯ndings document that investors perceive long-term growth targets as credible regardless of the SPFH length. Our study contributes to the current debate on the use of strategic plans as comprehensive disclosure able to provide credible and useful information.