Research On The Decisions Of Analyst Following And The Information Supply Efficiency Of Securities Analysts

As information intermediary between investors and listed companies, Securities analysts use their expertise and comparative advantage of information-gathering process to provide investors with information which can reflect the intrinsic value of securities,thereby enhancing the efficiency of capital market pricing. on the other hand , as a rational economic man, the Securities analysts tend to gather information which is based more on the market after the trade-offs between cost and benefit of Information collection. In this way, the increase in securities analysts will raise the stock price synchronicity.Analysts'role of enhancing the efficiency of pricing has been widely demonstrated in the mature markets. While in the emerging capital market of China, analysts'role has not yet been supported by theory and empirical data.So in this paper, we use the A-share listed companies from year 2006 to 2010 as the sample, and aim to find the factors affecting the decision-making of analyst following and study the role of analysts in capital market by testing the relationship between analyst following and stock price synchronicity, under a combination of theoretical analysis and empirical tests.The study find that:1)referring to the factors affecting decisions of analyst following,after the trade-offs between cost and benefit of Information collection, analysts tend to choose companies which are large, of high growth, and strongly profitable on the consideration of operating characteristics ,the the same time, analysts tend to choose companies which have a large proportion of institutional ownership, large stock trading volume, and low stock price volatility on the Considerations of operating characteristics. 2) referring to the research on the?efficiency of Information supply of analysts, the paper finds that when the number of analysts following increases, share prices synchronicity becomes larger, which shows that China's analyst based more on market-level information to provide advice to investors, rather than base more on the fundamental information of the companies, so that they have not served well to enhance the efficiency of pricing.In addition, on the Robustness test, this paper uses two-stage least squares regression to test the endogeneity of analyst follow-up with share prices synchronicity, together with replacing the key variables and removing zero samples, to further verify the results of this study. Finally, based on empirical findings, the paper further make some recommendations with a view to help regulators and investors to understand the role and limitations of securities analysts and to promote the efficiency of capital markets to some extent.