Optimistic bias in management forecasts by Japanese firms to avoid forecasting losses

Myojung Cho, Young D. Hah, Oliver Kim

研究成果: Article査読

7 被引用数 (Scopus)

抄録

Listed firms in Japan are effectively compelled to report management forecasts of sales, ordinary income, and net income along with actual earnings and sales each year. Prior studies report that Japanese managers tend to announce optimistic forecasts of earnings. We show that a large part (61.6%) of the overall optimistic bias in management earnings forecasts in Japan can be explained by loss forecast avoiding behavior of a small fraction (5.25%) of firms. Such behavior is caused in part by the view of the main bank and power group that the management forecast of earnings is the manager's earnings target. Our findings suggest that the Japanese stock market recognizes such loss forecast avoidance and accordingly discounts new information in management forecasts.

本文言語English
ページ(範囲)79-101
ページ数23
ジャーナルInternational Journal of Accounting
46
1
DOI
出版ステータスPublished - 2011 3 1

ASJC Scopus subject areas

  • Accounting
  • Finance

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