A Comparison of Consolidated and Parent-Only Earnings Forecasts for Japanese Firms

There is relatively little research on the nature of the earnings forecast process in Japan. Most of it analyzes forecasts of parent-only earnings and compares their accuracy to forecasts of consolidated earnings for US firms. Considerable evidence is described to indicate that consolidated earnings figures are better measures of economic earnings generated by Japanese parent companies through the assets over which they have control. Using estimates of consolidated earnings for both Japanese and US firms is the only way to achieve some level of comparability for this analysis.