The paper examines the rewards associated with meeting or beating earnings expectations (MBE) and tests alternative explanations for this reward. It finds that firms that meet or beat analysts' earnings forecasts experience higher average quarterly returns than those that fail to do so, even after controlling for overall earnings performance. The evidence suggests that MBE is consistent with both earnings management and expectation management. While investors may discount MBE cases resulting from expectation or earnings management, the premium remains significant. The results support an economic explanation for the premium, namely that MBE is informative of future firm performance. The study also finds that the frequency of MBE cases has increased in recent years, and that the premium to MBE is higher for firms that consistently meet or beat expectations. The premium is also higher for cases where earnings surprises are more favorable. The study tests various hypotheses regarding the premium to MBE, including its relationship to earnings persistence, MBE persistence, and management intervention. The results show that the premium to MBE is higher for firms with losses or earnings decreases, and for "habitual beaters" rather than "sporadic" beaters. The study also finds that the premium to MBE is not significantly affected by whether the MBE is due to earnings management or expectation management. Overall, the findings suggest that investors reward firms that meet or beat earnings expectations, and that this reward is consistent with rational investor behavior.The paper examines the rewards associated with meeting or beating earnings expectations (MBE) and tests alternative explanations for this reward. It finds that firms that meet or beat analysts' earnings forecasts experience higher average quarterly returns than those that fail to do so, even after controlling for overall earnings performance. The evidence suggests that MBE is consistent with both earnings management and expectation management. While investors may discount MBE cases resulting from expectation or earnings management, the premium remains significant. The results support an economic explanation for the premium, namely that MBE is informative of future firm performance. The study also finds that the frequency of MBE cases has increased in recent years, and that the premium to MBE is higher for firms that consistently meet or beat expectations. The premium is also higher for cases where earnings surprises are more favorable. The study tests various hypotheses regarding the premium to MBE, including its relationship to earnings persistence, MBE persistence, and management intervention. The results show that the premium to MBE is higher for firms with losses or earnings decreases, and for "habitual beaters" rather than "sporadic" beaters. The study also finds that the premium to MBE is not significantly affected by whether the MBE is due to earnings management or expectation management. Overall, the findings suggest that investors reward firms that meet or beat earnings expectations, and that this reward is consistent with rational investor behavior.