Management Forecasts, Idiosyncratic Risk, and the Information Environment

Norio Kitagawa and Shin'ya Okuda ()

The International Journal of Accounting, 2016, vol. 51, issue 4, 487-503

Abstract: Management forecasts are an important source of information for the Japanese stock market. In this paper, we use management forecast error as a proxy for disclosure quality to investigate the relationship between disclosure quality and idiosyncratic risk. We find that management forecast error is positively related to idiosyncratic risk, suggesting that high-quality public information reduces idiosyncratic risk. Furthermore, we present evidence that management forecast error is less positively related to idiosyncratic risk in relatively good information environments.

Keywords: Management forecasts; Idiosyncratic risk; Information environment; Disclosure quality; Japanese stock market (search for similar items in EconPapers)
JEL-codes: G12 G14 M41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:51:y:2016:i:4:p:487-503

DOI: 10.1016/j.intacc.2016.10.002

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