Do Business Relationships Affect the Accuracy of Analyst Earnings Forecasts? Evidence from China

Wang, Shengnian; Wei, Chunyan; Han, Liang

doi:10.1111/ajfs.12164

Cited by 10 publications

(8 citation statements)

References 62 publications

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“…See, for example,Dugar and Nathan [1995],Lin and McNichols [1998],Michaely and Womack [1999], O'Brien, McNichols, andLin [2005],Clarke et al [2006],Barber, Lehavy, and Trueman [2007],Chan, Karceski, and Lakonishok [2007],Ljungqvist et al [2007],Agrawal and Chen [2008],Barniv et al [2009],Kadan et al [2009],Ke and Yu [2009],Chang and Choi [2017],and Wang, Wei, and Han [2017].…”

mentioning

confidence: 99%

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

Bradshaw

Huang

Tan

2018

J of Accounting Research

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Prior research demonstrates that a strong institutional infrastructure in a country moderates self‐serving behavior of market participants. Cross‐country economic activities have increased significantly, presenting a research opportunity to examine the relative influence of local versus foreign institutional infrastructure on individual market participants. We utilize variation in analyst‐country location relative to covered firm location to examine institutional determinants of optimism in analyst research. Focusing on target prices, where persistent optimism is well documented, we find that analysts domiciled in countries with stronger institutional infrastructures exhibit significantly attenuated target price optimism and more value‐relevant target prices. Our results demonstrate the importance of domestic country‐level institutional factors in moderating self‐serving behavior of market participants engaged in cross‐country activities.

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confidence: 99%

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

Bradshaw

Huang

Tan

2018

J of Accounting Research

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“…() and Wang et al . () also show the optimistic bias in better informed analysts’ forecasts.The idea of cryptocurrency and blockchain was born in 2008. Therefore, investors in cryptocurrency are in general young and willing to accept new ideas.…”

Section: Literature Reviewmentioning

confidence: 83%

“…Wang et al . () verify the feasibility of using the triangular no‐arbitrage condition in foreign exchange markets to estimate exchange rates through bitcoin. Cheah and Fry () and Cheung et al .…”

Section: Literature Reviewmentioning

confidence: 86%

Cryptocurrency, confirmatory bias and news readability – evidence from the largest Chinese cryptocurrency exchange

Zhang

Zhou

Pan

et al. 2019

Accounting & Finance

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We investigate whether Chinese cryptocurrency investors show confirmatory bias when processing authority-related news. Authority-related news is defined as news that is related to government authority (including central bank) policies or talk. By using data from the largest cryptocurrency exchange in China, we find that investors' response to authority-related news is negative and significant in general. Moreover, we find that the abnormal trading volume and standard deviation of abnormal trading volume are significantly higher for authority-related news with higher readability, suggesting investors respond to the more readable authority-related news with more trading behaviour.

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“…On the other hand, there are still some irregularities in the securities analyst industry in China, such as the quality of securities analysts is uneven, and the interest collusion between analysts and listed companies, etc. (Wang, Wei & Han, 2017). Therefore, in China's securities market, whether securities analysts provide valuable incremental information, whether they play the role of information competition or information supplement, is still worthy of further discussion.…”

Section: Securities Analystsmentioning

confidence: 99%

“…However, another view is that the quality of securities analysts in China is uneven, and some analysts are even reported to collude with listed companies. Investors pay little attention to analyst reports due to their poor quality (Wang, Wei & Han, 2017).Therefore, analysts do not play the role of information competition or information supplement. Therefore, this paper puts forward the following two opposite theoretical hypotheses: H3a: After removing the investor sentiment component in the market reaction of the information announcement, securities analyst demonstrate the role of information competition or information supplement.…”

Section: Theoretical Hypothesismentioning

confidence: 99%

Do the Securities Analysts Play the Role of Information Competition or Information Supplement? Empirical Analysis Based on Investor Sentiment

Liu

et al. 2021

Sage Open

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The purpose of this article is to investigate the role of securities analysts in Chinese stock market. Taking the earnings announcements of listed companies, analysts’ earnings forecast and analysts’ recommendations in Chinese stock markets from 2014 to 2018 as the samples, this paper explores the influence mechanism of investor sentiment on the market reaction to announcements, and investigates the influence mechanism of investor sentiment on the role of securities analysts under the framework of behavioral finance theory. On the basis of theoretical analysis, this paper empirically tests the relationship between the information content of analysts’ reports and the information content of the earnings announcements from the perspective of behavioral finance, and discusses the role of securities analysts in the stock market. The results show that during the periods of high investor sentiment, securities analysts do not demonstrate the role of information competition or information supplement. On the other hand, during the periods of low investor sentiment, securities analysts play the role of information competition or information supplement. Furthermore, after excluding the investor sentiment component of the market reaction to announcements, securities analysts do not demonstrate the role of information competition, but play the role of information supplement. The findings of this study offer new insights into the role securities analysts play in Chinese stock market, which is conducive to improving the quality of analysts’ reports, thus enhancing the efficiency of the securities market.

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Do Business Relationships Affect the Accuracy of Analyst Earnings Forecasts? Evidence from China

Cited by 10 publications

References 62 publications

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

Cryptocurrency, confirmatory bias and news readability – evidence from the largest Chinese cryptocurrency exchange

Do the Securities Analysts Play the Role of Information Competition or Information Supplement? Empirical Analysis Based on Investor Sentiment

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