Corporate Groups and Stock Pricing in Japan –Information Transfer Effects of Earnings Forecast Revision-

In this study we empirically examine whether the earnings forecast revisions released by the membership firms within Japanese corporate groups have information transfer effects over other membership firms in order to analyze the extent to which the horizontal and vertical corporate groups are functioning effectively in the Japanese economy. We find evidence confirming the existence information transfer effects for both horizontal and vertical corporate groups. In the case of horizontal groups, we also show that earnings forecast revisions involving bad news have information transfer effects, while those involving good news do not..