The Impact Of Securities Underwriting On Security Analysts' Independence

Since the supply chain of accounting information in securities market ranges from the preparation of accounting information to the external audit and stock analysis of securities analysts,it can be said securities analysts are the necessary links of exchange between companies and market,and between market and investors.They collect and analyse market information as professionals,and then report their findings in forms of stock recommendations and earnings forecasts to the investors.In China,most small investors lack investment knowledge,the guiding role of views from securities analysts on investors' behavior is more evident.The responsibilities of securities analysts require them to keep an independent position in the practice;however,there are several interests-related factors in real life conflicting with their independence,one aspect of which is the underwriting.This paper made an empirical study on the impact of securities underwriting on security analysts' independence.First,we retrospect relative theory and literature.Then,we described the business conditions of security analysts and analyzed the conflict of interests. Lastly,based on the data of the security analysts' stock recommendations and earnings forecasts from 2004 to 2008 in our county,we used empirical test to examine the impact of securities underwriting on security analysts' independence.The empirical results shows:when the security firm and the listed firm have underwriting relationships,the analysts provide higher stock rank and overvalue earnings more frequently;however,there are not significantly differences in the accuracy of analysts' earnings forecasts even if underwriting relationships appear.This study indicates that,securities underwriting have an impact on securities analyst's independent position. How to normalize the acts of securities analysts,and to guide security analysts business to develop orderly is a problem must be solved to promote the development of the security market in a healthy way.