The Comparison To The Accuracy Of Earning Forecast From The Underwriters’ Analysts And Independent Analysts

Securities analysts have played a dual role through gathering accounting information and providing investment information in securities market. Investors need to use the unbiased and accurate research report provided by analysts to make their investment decision, but in reality, analysts also serve for the customers who have a relationship with the underwriters. Securities analysts’trust responsibility for investors and to agents could be intense as soon as the target company has the underwriting relationship with the Securities Company. According to the hypothesis on economics of rational people, we can suppose that analysts’goal in the securities market is to maximize their interests. Research report published by analysts subordinate to securities companies has become the most important stock market index, on which most investors rely to make their investment decisions. The accurate earning forecast information can guide the investors to make good investment decision and also can make a good deposition of resources; information with large deviation will mislead the investors, which is not good for stabilization of security market.Combining the empirical and normative research method, we have a comparing research on the earning forecast between analysts in principal-agent relationship and independent analysts. We classified the analysts into two groups. Through the statistical analysis, non-parameter test to study the profit forecast accuracy differences from different types of analysts. Then we take the overall and matching sample regression to have an inspection of the significant influence of the analysts to earnings forecasts. We made use of theories on economics to the interest drives and motives behind earning forecast error of underwriters analysts, which could make the investors and securities market information demanders have a rational knowledge of the research report of different types of analysts from time dimensionOur study found that when the securities company to which the analysts subordinated is the underwriters of the target company, earning forecasts is bigger; we can also see that in the securities market, analysts will mislead the investors in face of the conflict of interest, for being short of independence. In addition, this paper also made a further study on the factors which can influence analysts’earning forecast accuracy, after putting the last three years corporate earnings standard deviation into our model, we find that the bigger corporate earnings volatility, the bigger earnings forecast error will be. Furthermore, earning forecast error of underwriters’analysts is obviously bigger than the independent analysts in different time window, which can give a better explanation that we can never ignore the underwriting factor, and also verified the stability of the model. This study plays a complement and expansion role in the existing research. We hope that this thesis could make a significant reference for analysts in securities market.