The Research On Predicting Effectiveness Of China's Security Analysts

Since 2007, China's stock market has experienced significant fluctuations. At the end of September 2007, The Shanghai composite index has breaked up 6000 points of the broader market. On the country, the broader market was retaining about of 3000 points in 2009. To face of the highly unstable stock market, most investors choose the analysis and prediction by analysts. Several times, investors are loss of confidence, because the forecast did not meet the fact. Security analysts are a special group in capital market. Their duty is collecting and analyzing all kinds of information and data related to listed companies, and then making the forecasts of the companies performance on their investment value. Finally, they should consolidate into a report which be published on market for referencing. The more unstable of the stock market, the better capable of the messaging analysis and rational functions to guide the market. It is the crucial stage of reflecting analysts'strength. In such a particular time, it is significant to study the effectiveness of the forecast by domestic analysts.Before, domestic models about earning forecast by security analysts are most used of random walk models and time series models, and then draw the relevant conclusions by comparing with the actual income. On the basis of existing research results, the paper used empirical analysis and researched the following three issues: the forecast and actual data'correlation, pre‐adjusting and long‐term span.The paper were discussed about the forecast and actual data'correlation from 2007 to 2009.In conclusion, there was significant correlation in the 1% confidence level at the three years. So it ensures that the analysis of data supports the conclusion better and makes it more logical rigor.At a specific time span, it is significance to re‐examine the event. From 2007 to 2009, the China stock market faces the severe fluctuations since into the specification development stage. It helps to identify the problems of domestic analysts'earnings forecasts and discover the breakthrough of improcements, through the accuracy analysis. So, there is a better way to interpret the accurate issue during the study.At present, the main analysis of analyst forecasts is short‐term, and long‐term pre‐adjustment is rarely involved for scholars. Therefore, the paper emphasises that analysts'predict is on the medium and long term for listed companies, and predict analysis is adjusted. And this plays a complementary role in analysts'forecast focuses on short‐term analysis about the effectiveness.