Abstract
This study examines the relation between top executive tenure and management forecast accuracy using a sample of Japanese listed firms for the period 2005-2013. I find that top executive tenure exhibits a U-shaped relation with management forecast error. Furthermore, the U-shaped relation with management forecast error varies with different levels of (1) top executive’s age, and (2) corporate governance quality. These results are consistent with the interpretation that top executive’s on-the-job learning improves management forecast accuracy up to a threshold, at which point top executive’s entrenchment dominates and management forecast accuracy worsens.
