Do Well Managed Firms Make Better Forecasts?

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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.

Paper published as:

ESCoE Discussion Paper, DP 2021-18, 21 Dec 2021 please see here.

National Bureau Economic Research (NBER) Working Paper 29591, Dec 2021, DOI 10.3386/w29591 please see here.

Centre for Economic Performance Discussion Paper, CEPD1821, 5 Jan 2022 please see here.