Does Benefit Relationship Affect Analysts’ Earnings Forecast?—Evidence from Chinese Stock Market

Abstract

Under the information asymmetrical theory, the Chinese securities analysts are affected by many benefit factors, so the purpose of the study is trying to figure out what benefit elements and how to affect analysts’ earnings forecasts. Using data from 2012 to 2015, the author creatively quantifies interest factors, and does the empirical analysis. Regression results indicate that the closer relationship between securities analysts and the listed companies management or institutional investors, the greater accuracy of their earnings forecasts. Besides, analysts’ reputation exists a negative correlation between earnings forecasts accuracy. Furthermore, securities’ underwriting relationships have no significant influence on the accuracy of analysts’ earnings forecasts, but the underwriting analysts are more likely to overestimate earnings per share of the target companies.