Study Of Relationship Between Information Disclosure Of Listed Companies And Analysts’ Earnings Forecasts

With the continuous development and improvement of the capital market, securities analystsplay an increasingly important role. On the one hand, analysts act as information users, collatingand analyzing all kinds of information they acquired by listed companies; On the other hand,analysts act as information provider, providing investors with information which has beendisposed for their investment decisions. Securities analysts’ role as an intermediary is acceleratethe speed of the flow of information, and effectively improve the operating efficiency of thecapital market. However, as an important source of information for analyst earnings forecasts,listed companies publicly disclose the quantity and quality of information will affect theperformance of analyst forecasts and the investment behavior of investors. Therefore, study therelationship between information disclosure of listed companies and analysts’ earnings forecasts,is of great significance for improving the quality of information disclosure and the efficiency ofcapital markets.This paper firstly reviewed the domestic and foreign literatures about the quality ofinformation disclosure and analyst earnings forecasts, then based on the asymmetric information,signal transmission theory and efficient market hypothesis and established appropriate models totest them. The sample including Shanghai and Shenzhen A-share listed companies is concerned byanalysts in the time period2006to2010. The empirical analysis about relations betweeninformation disclosure of listed companies and analysts’ earnings forecasts are divided into threeparts, first using a modified Jones model to measure the quality of accounting information,examine the relations between the quality of financial reporting information and analysts behavior,Second, investigate how the management earnings forecast disclosure or not, disclosure ways anddisclosure accuracy affect analyst behavior, and further examine the existence of complementaryand alternative relationship between the financial reporting information and managementforecasts.The empirical results indicated that, firstly, the quality of accounting information have apositive impact on the analysts’ forecasts, that is, the company with higher quality of informationhave more accurate analyst forecast and less dispersion, but because of reduced investor demandfor information services, the higher quality of accounting information have a fewer analystfollowing. Secondly, management forecast provide valuable information for analysts, especiallythe voluntary disclosure, that is, compared with the mandatory disclosure of company,management voluntary earning forecast will have a larger analyst following, more accurate analystforecast and less dispersion, when the company of management forecast more accurate, its effectis more significant. Thirdly, the quality of accounting information and management earningsforecasts combined effect analysts forecast behavior, when the lower quality of accountinginformation, management voluntary earning forecast and analysts forecast behavior have analternative relationship, with the improvement of the quality of accounting information, they havea complementary relationship.The result indicate that analysts not only concerned about the fundamentals of listedcompanies, but also concerned about management forecast during earnings forecasts, and providemore accurate forecast report to investors. In addition, With the improvement of the quality offinancial reporting information，also should further standardize the information, time and accuracyof management forecast. Then encourage the voluntary disclosure and constantly improve the company’s information disclosure system, provide high-quality source of information to analystsand investors, in order to alleviate the problem of information asymmetry and to improve theallocative efficiency of capital markets.