Analysts Forecast Earnings Of Listed Companies And Real Earnings

The securities analysts will issue their prediction to the market about the information they hold in hand after professional analysis, which will be taken as a reference by market investors in making investment decisions. From this point of view, analysts’ earnings forecasts can be influential on listed companies and investors. However, as the market participants possessing the most amount of information, listed companies tend to meet the prediction of analysts for the purpose of maintaining the images and attracting investment driven by the image and interest needs. In order to reach such expectation, they will choose the real earnings management to construct the real trade. However, from the long-term development perspective of enterprises, the real earnings management behavior will affect the embedded value of enterprises, thus hurting the interest of investors. Therefore, it is necessary to study the real earnings management motivation predicted by analysts in terms of the development of capital market. Taking the A-stock listed companies of China in2011as the objects of research, this paper attempts to study whether the listed companies will make real surplus management under the influence of the earnings forecasts made by securities analysts. The result of the study indicates that the real earnings management can be done actually by the management level in order to meet the surplus prediction of analysts. However, according to the different earnings forecasts of analysts, the degree of their real earnings management differs as well. Those companies with smaller positive earnings error tend to have greater degree of real earnings management, while there is no great relevance between the error and real earnings management degree for companies whose earnings error is negative. Meanwhile, as is found by the study of this paper, companies with more analysts may lead to greater degree of real earnings management. Therefore, based on the prediction issued by analysts, the listed companies will compare it with their own earnings situation to decide whether the real surplus management is needed, which shall be identified by securities analysts and investors. In addition, the related policies and recommendations are proposed by this paper as well.