Empirical Research On Cost Sticky And The Accuracy Of Analysts’ Earnings Forecasts

The main function of captital market is guiding the scarce resources to the mostefficient part,realizing the maximization of resources utility and the optimal allocationof resources.But the real world is not perfect,the information asymmetry andmanager’s self—interest behavior always lead the waste of resources,result in coststicky.As the most important information of capital market,accounting informationsespecially earnings informations usually get users highly attention. Now,with China’scapital market gradually grow to mature,and the value investment ideaformed,investors need more predicted informations than historical informations aboutfirms.Security analysts are special groups in the capital market,they are thecommunication bridge between investors and firms,they collecte all kinds ofinformations and datas about firms,use their professional analysis ablitities and writereports to provide informations that can reflect the securities’ true value to the marketparticipants.Security analysts are historical information needers,also the firms forecastinformation providers.In all the forecast informations,earnings forecast informationsget more attentions of people,whether the analysts’ earnings forecast is accuracy,howmany factors will affect the accuracy of earnings forecast,all these questions get closeattentions of theoretic and practical field.The academic circles do lots of researchsabout the cost sticky,but there is rarely research about how cost sticky influence theaccuracy of analysts’ earnings forecast.So,this article from the perspective of coststicky to discuss whether cost sticky influence the accuracy of analysts’ earningsforecasts take certain theoretical and realistic significance.This article selects the analysts’ earnings forecast and cost revenue datas ofpharmaceutical industry from2000～2010year,all the datas are from CSMARdatabase.Results indicate that cost sitcky influences the accuracy of analysts’earningsforecast,and the firms with sticker cost behavior have less accurate analysts’earningsforecasts than firms with less sticky cost behavior.Furthermore,the article alsodiscusses the response of market to the earnings surpirse about the sticky firms.Theresult shows that the cost sticky does not have significant correlation with theearnings surprise,this is not consistent with hypothesis2.There are two reasons aboutthe result:first,the security market in not mature,have not reached thesemistrong—form market;second,Chinese investors do not realize cost sticky,notaware the cost sticky will reduce the accuracy of analysts’ earnings forecast,therebyaffect the real value of security. There is certain theoretical and realistic significance to discuss the relationship of cost sticky and analysts’ earnings forecast.On the onehand,there is rarely study about how cost sticky affects the accuracy of analysts’earnings forecast in our country,so this study enriches the topic about cost sticky andanalysts’ earnings forecast.Meanwhile the results indicate that cost sticky reduces theaccuracy of analysts’ forecast,it can broaden the analysis about factors influence theaccuracy of analysts’ earnings forecast,provide certain theoretical basis for follow uppursuers.On the other hand,results indicate that cost sticky reduces the accuracy ofanalysts’ earnings forecast,but investors do not realize the negative effects by coststicky,this has certain guiding significance to practical field—enlighten the securityanalysts take more attention to the firms cost situation,investors can not follow theanalystis’ earnings forecast and investment guide blindly when they make theinvestment decisions,investors should consider the inner factor of firms so as to makerational investment decisions.As there is rarely study combine this two aspects,so thisarticle adds the research about this field.Form the whole security market,manyperspectives to study the accuracy of analysts’ earnings forecast will be the futherresearch area.