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Do Well Managed Firms Make Better Forecasts?

Author

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

Abstract

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.

Suggested Citation

  • Nicholas Bloom & Takafumi Kawakubo & Charlotte Meng & Paul Mizen & Rebecca Riley & Tatsuro Senga & John Van Reenen, 2021. "Do Well Managed Firms Make Better Forecasts?," NBER Working Papers 29591, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29591
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    Cited by:

    1. 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.
    2. Botsis, Alexandros & Görtz, Christoph & Sakellaris, Plutarchos, 2024. "Quantifying qualitative survey data with panel data," Journal of Economic Dynamics and Control, Elsevier, vol. 167(C).
    3. 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.
    4. 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.
    5. Bilicka, Katarzyna & Scur, Daniela, 2024. "Organizational capacity and profit shifting," Journal of Public Economics, Elsevier, vol. 238(C).
    6. 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.
    7. Joel Suss & Adam Hughes, 2023. "Bank expectations and prudential outcomes," Bank of England working papers 1035, Bank of England.
    8. 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.
    9. 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).
    10. 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.
    11. 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).
    12. 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.
    13. 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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    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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