Research On IPO Earning Forecasts Quality Of Listed Companies

As a kind of financial information with prediction, earning forecast information in essence is endowed with uncertainty and its disclosure manner should not belong to the form of compulsory disclosure, but disclosing earning forecast information compulsorily also justifies in a certain degree when taking the great role played by earning forecast information in assessing the future value of a company into account, so there are two disclosure systems available for earning forecast information which are compulsory disclosure system and voluntary disclosure system. Besides, with regard to definition of the quality of earning forecast information, this essay uses earning forecast error as an alternative factor to assess the quality of earning forecast information.First, this essay reviews the process for transition of earning forecast disclosure system in china. March 15^th is the turning point for earning forecast disclosure system transition from compulsory disclosure to voluntary disclosure, and this essay does a comparison of disparity between earning forecast system and earning forecast error regulation. Then, this essay makes a theoretical analysis about earning forecast quality, and analyzes the reason for long-term-low quality of earning forecast based on a comparison of earning forecast quality under compulsory disclosure system and voluntary disclosure system. At last, we use game model to analyze trilateral game among investors, managers of the company and regulators, and demonstrate the necessity for governmental intervention in improving the earning forecast quality theoretically.Then, the essay shifts from theoretical section to empirical section, and empirical section includes two parts as follows. First, we use multi-factor linear regression model to regress the factors which influence the earning forecast quality ,the empirical result indicates that the four factors as share concentration,the ratio of tradable shares,ROA,forecast period are statistically significant for the quality of earning forecast. Then, this essay divides earning forecast of the sample into earning forecast with high quality and low quality based on statistical forecast theory and relative regulations in china. Earning forecast with high quality refers to the earning forecast with forecast error under 10%, and earning forecast with low quality refers to the earning forecast with forecast error beyond 10%. This essay makes a comparison of market reaction between high-quality earning forecast and low-quality earning forecast, and discovers that investors hold relatively high confirmation about high-quality earning forecast, but as for low-quality earning forecast, the market makes an obvious readjustment after the disclosure of balance statement.At last, we make a brief summary of the whole article, and put forward some relative suggestion and future research direction.