Do Well Managed Firms Make Better Forecasts?

New NBER Working paper by Nicholas Bloom, Takafumi Kawakubo, Charlotte Meng, Paul Mizen, Rebecca Riley, Tatsuro Senga & John Van Reenen.

“We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices.”

Read more here.

Posted by at 2:22 PM

Labels: Forecasting Forum

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