Financial Analysts’ Forecasting Experience,Cash Flow Forecast Accuracy And Career Outcome

As an important intermediary of information transfer in capital market, financial analysts tend to put a lot of energy to the research of listed company, dynamic tracking company, and play an important role in the aspect of information collection, sorting and transferring, has become a significant force in the Chinese capital market. Their researches have a significant impact on investors’,especially small and medium-sized investors’investment decisions. Because many analysts’reports have important influence for stock market participants, therefore, they have attracted the extensive attention of scholars, become an important field in the study of finance and accounting. Domestic and foreign literature on analysts’researches mainly focus on the analyst’ earnings forecasts and stock rating, including analysts predict behavior effectiveness, the influence factors of prediction accuracy, surplus forecast and stock information validity, etc. In recent years,in order to meet the needs of investors to the cash flow information, analysts in China begin to provide cash flow forecast report since2002, the increasing number of cash flow forecast shows that the importance of cash flow forecast is self-evident. However, our researches about cash flow forecast are really less. Existing research is mainly about cash flow management and control, incentives for cash flow forecast, the factors affecting the accuracy of cash flow is still a blank.So, what are the factors that affect the accuracy of the analysts’ cash flow forecast? We study on this question at first. Through studying the domestic and foreign literature about analysts forecast accuracy, we find analysts forecast experience have some sort of relationship with forecasting accuracy. Furthermore, we contact it with analyst career outcome in our country, found that the analysts’ forecast accuracy affect the analyst career outcome at a certain extent. Therefore, we generate our research hypothesis based on the theoretical analysis:Hl(a):after controlling for other factors, the more cash flow forecast experience analysts have, the more accurate cash flow forecasts. H1(b):after controlling for other factors, the more cash flow forecast experience on firm analysts have, the more accurate cash flow forecasts. H2:after controlling for other factors, the more accurate the former cash flow forecasts, the more accurate the current cash flow forecasts. H3:after controlling for other factors, the more accurate earnings forecasts, the greater the probability of analyst career changes. H4:after controlling for other factors, the more accurate cash flow forecasts, the greater the probability of analyst career changes. This paper investigates the relationship between forecasting experience and past forecast accuracy with cash flow forecast accuracy using the sample financial analysts’ cash flow forecast data of A Shares in China during2007to2011. Based on this, we investigate the relationship between financial analysts’forecast accuracy and career outcome using the sample of financial analysts’earnings forecast and cash flow forecast data of A Shares in China during2007to2011.We mainly using STATA and EXCEL for data processing and analysis.We found that, firstly The firm-specific cash flow forecasting experience is significant positive with cash flow forecast accuracy, which suggesting that financial analysts will acquire more private information and appraised those private information more effectively as the time of they followed the specific firm increased, so the cash flow forecast accuracy will be more exact. Secondly, the past forecast accuracy is significant positive with cash flow forecast accuracy, which suggesting that financial analyst will renew those cash forecast data based on past cash flow accuracy when they issued the cash flow report. About career outcome, we found that financial analysts’ earnings forecast and cash flow forecast accuracy is positive with financial analysts’ career outcome.The high probability of financial analysts’job-hopping is with more accuracy of financial analysts’forecast. We further found that the high probability that financial analyst during smaller and medium brokers enter the bigger brokers is positive with higher accuracy of financial analysts’earnings and cash flow forecast.At present, domestic research about analysts’cash flow forecasts and analysts’ career outcome is less.On the one hand,the sample is insufficient. On the other hand, our country securities market’s data system is not perfect enough, the data collection is very difficult. This article only studied the analysts’career outcome between the securities company because of the insufficient sample. In fact, there also exists analysts’ career outcome between the seller’s securities companies and the buyer’s fund management companies.In future study, we can discuss concrete analyst form the different characteristics of these two career change, and be more comprehensive understanding of the analyst career outcome.