The Relevance of Analysts' Earnings Forecasts in Japan

This study examines the role of financial analysts in equity valuation in Japan by comparing the relevance of financial analysts' earnings forecasts, over financial statement information, to investors' decisions. We find that the value-relevance of a set of accounting variables is very modest, but the incremental contribution of analysts' forecasts is very significant. This is in line with the expectation that the skill and expertise of analysts are more valuable in markets with poor financial disclosure, such as Japan. We also find that the importance of the financial statements increases over time while the importance of the analysts' forecasts does not change. We also provide evidence of the effect of Japanese corporate groupings, keiretsu, on the informativeness of accounting signals and earnings forecasts. The results show that the contribution of accounting variables to valuation is lower for keiretsu firms, which supports the exclusionary hypothesis that companies which are a part of keiretsu, disclose less information than do non-keiretsu companies. The analysts' forecasts are equally important for investors in both types of firms. Copyright Blackwell Publishers Ltd, 2005.

Creating a supranational institution: the role of the individual and the mood of the times

This study notes that, while the research literature which addresses accounting change in different countries is preoccupied with issues such as economic and legal environment, culture and consensus, research in accounting history recognizes, in biographical studies, the role sometimes played by individuals in influencing the outcomes in moments where change takes place. The article looks at the case of the creation of the International Accounting Standards Committee and analyses the evidence concerning the roles of the central individuals, Henry Benson, Douglas Morpeth and Wally Olson. It concludes that while it is difficult to disentangle the strands of institutional politics and responses to prevailing policy issues, the individuals concerned did play major roles and there is a case for the intervention of individuals to be considered in the international accounting literature as one of the issues that helps build accounting infrastructure