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Do well managed firms make better forecasts?

Author

Listed:
  • Bloom, Nicholas
  • Kawakubo, Taka
  • Meng, Charlotte
  • Mizen, Paul
  • Riley, Rebecca
  • Senga, Tatsuro
  • Van Reenen, John

Abstract

We link new forecast and management data on over 20,000 firms to data on productivity in manufacturing and services. The panel survey was administered in the UK in July 2017 and November 2020, coinciding with two periods of considerable uncertainty from Brexit and Covid. We find that better-managed firms make more accurate forecasts for firm-level turnover and macro-level GDP. Uniquely, we show better-managed firms are also aware that they make more accurate forecasts and have greater confidence in their predictions. This highlights how superior forecasting ability enables well-managed firms to make improved operational and strategic choices.

Suggested Citation

  • Bloom, Nicholas & Kawakubo, Taka & Meng, Charlotte & Mizen, Paul & Riley, Rebecca & Senga, Tatsuro & Van Reenen, John, 2025. "Do well managed firms make better forecasts?," LSE Research Online Documents on Economics 130291, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:130291
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    File URL: https://researchonline.lse.ac.uk/id/eprint/130291/
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    2. Alexandros Botsis & Christoph Gortz & Plutarchos Sakellaris, 2024. "Quantifying Qualitative Survey Data with Panel Data Structure," CAMA Working Papers 2024-21, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Chen, Ying & Kimura, Yosuke & Inoue, Kotaro, 2025. "How does managerial perception of uncertainty affect corporate investment during the COVID-19 pandemic: A text mining approach," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    4. Norris Keiller, Agnes & De Paula Neto, Aureo & Van Reenen, John, 2024. "Production function estimation using subjective expectations data," LSE Research Online Documents on Economics 126812, London School of Economics and Political Science, LSE Library.
    5. Bilicka, Katarzyna & Scur, Daniela, 2024. "Organizational capacity and profit shifting," Journal of Public Economics, Elsevier, vol. 238(C).
    6. Agnes Norris Keiller & Áureo de Paula & John Van Reenen, 2024. "Production function estimation using subjective expectations data," IFS Working Papers WCWP15/24, Institute for Fiscal Studies.
    7. Botsis, Alexandros & Görtz, Christoph & Sakellaris, Plutarchos, 2024. "Quantifying qualitative survey data with panel data," Journal of Economic Dynamics and Control, Elsevier, vol. 167(C).
    8. Imani, Yusuke & Ohyama, Atsushi, 2022. "The Roles of Structured Management in the Formation of Transactional Relationships," TDB-CAREE Discussion Paper Series E-2021-07, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    9. Alexandros Botsis & Christoph Görtz & Plutarchos Sakellaris, 2020. "Quantifying Qualitative Survey Data: New Insights on the (Ir)Rationality of Firms' Forecasts," CESifo Working Paper Series 8148, CESifo.
    10. Mancini, Anna Laura & Tommasino, Pietro, 2023. "Fiscal rules and the reliability of public investment plans: Evidence from local governments," European Journal of Political Economy, Elsevier, vol. 79(C).
    11. Chen, Cheng & Senga, Tatsuro & Sun, Chang & Zhang, Hongyong, 2023. "Uncertainty, imperfect information, and expectation formation over the firm’s life cycle," Journal of Monetary Economics, Elsevier, vol. 140(C), pages 60-77.
    12. Petre Caraiani & Nazli Karamollaoglu & Cihan Yalcin, 2025. "Financial Conditions, Uncertainty and Expectations Errors of Firms," Working Papers 2515, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    13. Joel Suss & Adam Hughes, 2023. "Bank expectations and prudential outcomes," Bank of England working papers 1035, Bank of England.
    14. Binz, Oliver & Ferracuti, Elia & Joos, Peter, 2023. "Investment, inflation, and the role of internal information systems as a transmission channel," Journal of Accounting and Economics, Elsevier, vol. 76(2).

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    Keywords

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    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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