A Study On The Accuracy And It’s Factors Of Management Earnings Forcasts

In the information society, because the earnings forecasts predict and calculatethe listed companies’ subsequent development, it’s important to listed companies andinvestors. At present, there is a lot of research on analysts’ earnings forecasts and IPOcompanies’ earnings forecasts, but the study on the annual reports’ is too less, so it issignificant to study this field. Because in the annual reports, earnings forecast is akind of voluntary disclosure information, as well as it is uncertain, the study on theaccuracy of management earnings forecasts is very important. Therefore, this paperstudy the accuracy of earnings forecasts in annual report and the factors affecting theaccuracy of earnings forecast.In this paper, we first introduce the system background and the review ofliteratures, and then we analysis relevant theory about voluntary disclosure, after that,we also analysis the necessity, cost-benefit and motivation of voluntary disclosure inearnings forecasts. In the empirical perspective, the accuracy of management earningsforecasts is measured by the relative divergence of the new-year’s net profit. Weanalysis the relationship between the accuracy of earnings forecasts and theinfluencing factors by the empirical method, and the results indicate that:①theownership concentration is negatively related to the accuracy of management earningsforecasts;②the proportion of independent directors to total number directors ispositively related to the accuracy of earnings forecasts;③the performance of listedcompanies is positively related to the accuracy;④LEV is positively related to theaccuracy, that is to say if the companies will raise funds, they will disclosure moreaccurate earnings forecasts information. In addition, we find that the establishment ofaudit committee, the proportion of managers’ ownership and CEO duality don’t affectthe accuracy of earnings forecasts. We also find that auditor’s opinion and industryhave effect on the accuracy of earnings forecast.At the end of this paper, based on the empirical evidences，we put forward someadvice on how to improve the accuracy of earnings forecasts. At the same time, itpoints out the drawbacks in the study and makes forecast to the following researchabout this article.