While numerous studies in accounting and finance are devoted to predicting firm-specific earnings and understanding the forecasting behavior of analysts and management, it is unclear whether or how accounting information at the micro level can be applied to the macroeconomy. Bonsall, Bozanic, and Fischer [2012], henceforth BBF, are part of a growing literature that seeks to address this question. BBF document that firm-specific management forecast releases are significantly positively associated with announcement-window aggregate stock market returns and further show that this significant market reaction is concentrated among “bellwether” firms. In this discussion, I argue that although BBF provide convincing evidence on the presence of timely macroeconomic information in management earnings forecasts, the exact nature of this information is somewhat of a black box. BBF’s results also raise the question of how the macroeconomic information content of management earnings forecasts differs from that of realized earnings. The answers to these questions can help reconcile the significantly positive association between management forecast surprises and aggregate stock returns with the previously documented negative relation between realized earnings surprises and aggregate stock returns.

We examine whether organizational form matters for a firm's cost of capital. Contrary to the conventional view, we argue that coinsurance among a firm's business units can reduce systematic risk through the avoidance of countercyclical deadweight costs. We find that diversified firms have, on average, a lower cost of capital than comparable portfolios of stand‐alone firms. In addition, diversified firms with less correlated segment cash flows have a lower cost of capital, consistent with a coinsurance effect. Holding cash flows constant, our estimates imply an average value gain of approximately 5% when moving from the highest to the lowest cash flow correlation quintile.