This paper investigates whether and how Japanese firms use management earnings forecasts as a performance target for determining executive cash compensation. Consistent with the implications of the agency theory, we find that the sensitivity of executive cash compensation varies with the extent...

Prior studies have indicated that earnings are useful for bond market investors and that beating earnings benchmarks is related to a firm's lower cost of debt (Jiang, 2008). This study examines whether management earnings forecasts are related to a firm's cost of debt. Our results indicate that...

We investigate managerial discretion over initial management earnings forecasts issued concurrently with earnings announcements. Japan's unique reporting environment, particularly its systematic bundled management forecasts, produces an earnings benchmark (i.e., forecast innovations) to which...