The Influence Of Analyst 's Private Information On Earnings Forecast Accuracy

Security analysts are generally considered as the bridge of information between the management and the security market, and are also considered to be the representative of an experienced investor with a strong ability to interpret the information. Chinese securities industry has only been about 20 years, and security analysts industry was found until 1996, with some research institutions and security firms began to specialize in industry research and company research. Since then, security analysts has play a guiding role in earning forecast. During the bull market in 2007, security analysts industry has witnessed a rapidly growth. The scale of institute and number of analysts has been increasing. Due to information superiority, analysts’ earnings forecasts has been considered as benchmark. However, Whether private information are able to have their lead to higher forecast accuracy, is the focus of scholars aboard and in have been concerned about in these years.This paper has referred to the latest research from other experts to introduce the variable called "Personal Information Dependence". We also taking into account the availability of information disclosure on the securities market particularity and data during the process. We explore whether the influential analyst consensus was significantly better than market expectations by the numeric analysis. Meanwhile, we selected data of analysts ’earnings forecasts from 2009-2012, trying to consider the relationship between the Personal Information Dependence and earning forecast bias.According to the empirical study, we firstly find analysts’ earnings forecasts are frequently overestimate. Compared to the market consensus, influential analysts do not have the forecast advantages. Secondly, analysts’ private information have not significantly improve the accuracy of their earnings forecasts in the whole sample, but increase the error. However, as we look into the data, we find when analysts overestimate, private information will increase the forecast error; while when analysts underestimate, private information significantly reduce the errors; Thirdly, private information could not significantly affect the stock price in the window period.