Internationalization and the reliance of analyst forecasts in stakeholder-oriented corporate governance: Evidence from Japanese MNEs

• Published in: Pacific-Basin finance journal Vol. 73; p. 101755
• Main Authors: Sakawa, Hideaki, Watanabel, Naoki, Gu, Junjian
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.06.2022
• Subjects: Analyst forecast; Internationalization; Japan; Mandated management forecast; Multi-National Enterprises; Multi-National Enterprises; Mandated management forecast; Analyst forecast; Internationalization; Japan
• ISSN: 0927-538X; 1879-0585
• DOI: 10.1016/j.pacfin.2022.101755

This paper investigates whether disclosure quality of analyst forecasts on management forecasts is measured as reliance of analyst forecasts on management forecasts and dispersion of analyst forecasts is affected by the internationalization under a unique setting of effectively mandated management forecasts in Japan. We find that higher internationalization would result in lower disclosure quality of analyst forecasts on management forecasts in Japanese corporations. This implies that firms with higher internationalization face the complexity and uncertainties. Second, greater foreign shareholdings enhance the disclosure quality of analyst forecasts on management forecasts, suggesting the effectiveness of foreign shareholders' disclosure pressure. Finally, greater bank ownership would also enhance the credibility of analyst forecasts on management forecasts under stakeholder-oriented corporate governance. •High degree of internationalization lowers reliance on analyst forecasts•Greater foreign shareholdings increase reliance on analyst forecasts in highly internationalized MNEs•Greater bank ownership in MNEs increases reliance on analyst forecasts