Study On The Influence Of Corporate Governance On The Accuracy Of Securities Analysts’ Earnings Forecasts

With the continuous development of capital market, securities analysts areplaying increasingly obvious role as an information intermediary. More and moreinformation users begin to pay attention to analysts’ earnings forecast information.Analysts’ earnings forecast information will not only affect the investor’s decision,but also affect the efficiency of capital market and the allocation of capital maket’sresources. However wether analysts’ forcast information is valuable depends on theaccuracy of the information, so it’s necessary to study the factors which affect theaccuracy of securities analysts’ earnings forecasts. Domestic study of the factorswhich affect the accuracy of securities analysts’ earnings forecasts started relativelylate, at present most research focused on the enterprise information disclosure quality.We believe that corporate governance, as a critical characteristic of an enterprise,will inevitably be taken into consideration by securities analysts when they make theearnings forecast. Moreover, because the corporate governance runs through thewhole life cycle of the operation in tne enterprise, it could influence the manner andconsequence of enterprise information transferring to outside, which affect the qualityof information got by analysts. Corporate governance, therefore, is a morefundamental factor which affect the analyst earnings forcast performance.In this paper we firstly analyze the path of how corporate governance affects theaccuracy of analyst earnings forecasts theoretically. Then we further have anempirical study to examine the effect imposed by corporate governance on thecharacteristics of analyst earnings forecasts by using the data from listed companiesin Shenzhen stock exchange from2007to2011. The results show that a high level ofcorporate governance will help to improve the accuracy of analyst earnings forecastsand the quality of enterprise information disclosure. We also find that the quality ofenterprise information disclosure has the mediating effect when corporate governanceaffect the information of analyst earnings forecasts. The results of this study providerelated theoretical basis and empirical supports for improving the corporategovernance structure of the enterprise and promoting the healthy development ofsecurities analyst industry. It is of great significance for the long-term development oflisted companies and capital market.