The role of credibility in the relation between management forecasts and analyst forecasts in Japan

We explore the relation between management forecasts and analyst forecasts to determine whether a moderating role exists for credibility. Two types of credibility are examined: management credibility and analyst credibility. Management credibility is evaluated by management's forecasting ability (based upon prior forecast outcomes) and the firm's underlying Corporate Governance (CG) structure. Analyst credibility is assessed by their forecasting ability only, based upon prior forecast outcomes. Two questions are addressed by this study: (1) does management credibility moderate the relation between management's initial forecasts and initial analyst forecasts? and, (2) is the relation between analyst forecasts and subsequent management forecast revisions moderated by analyst credibility?