An Empirical Study On The Analysts’ Earnings Forecast And Its Influence Factors

Separation of ownership and management of the enterprise is one of the foundations of modern capital market, but this separation also caused serious information asymmetry between market players. Therefore, the interests of listed companies’outside stakeholders need operators disclosing the real situation of enterprises timely, securities analysts this time need between the interests of listed companies and external stakeholders to assume the role of a bridge of information to help improve the efficiency of the securities market. Securities analysts have independent status in the securities market professionals who have complete knowledge and analytical skills by collecting all kinds of information processing market, the future development and profitability of listed companies to make predictions, and to invest provide investment advice and guidance. Securities analyst according to different affiliation can be divided into buy-side analysts, sell-side analysts and independent analysts, the research object of this paper is to serve on the company’s domestic securities sell-side analysts group, this group is also developing time soon, but for China It is essential to improve the securities market, and therefore the value of work and study their behavior characteristics of great significance.Domestic and foreign research analyst earnings estimates in its basic factors when there are three main theoretical reference, namely the efficient market theory, asymmetric information theory and behavioral finance theory. Efficient Market Theory in 1970 · proposed by Eugene Fama, whose main content is effective when the market price of securities will not disseminate the information market affected, that is reflected in the market price of information is efficient. Efficient market theory in accordance with the validity of the securities market is divided into three types:Weak form, semi-strong form efficient and strong form. Effective in the weak market, the Securities Technology Analysis invalid; in the semi-strong efficient market, fundamental analysis is invalid; in strong form efficient market, access to insider information can not get excess returns. Our market research shows that effective in a weak phase. Asymmetric information refers to the various participants in the market are not the same amount of information to grasp, which more fully grasp the information of participants in the transaction game advantage occupy the more obvious. Information asymmetry caused by market failure, and because of this phenomenon is widespread, investors, conflicts of interest, and the game between listed companies and securities analysts becomes complicated. Behavioral finance is based on psychology and other disciplines to study various behavioral characteristics of market participants of a theory, it is not only study people’s rational investment decisions, it is possible to explain and predict a variety of irrational decisions. Effect of behavioral finance securities analysts forecast earnings mainly reflected in overconfidence, lack of reaction and overreaction on herding three points.In this paper, the domestic and overseas literature research analyst earnings estimates on issues of the sort, and in accordance with the kind of factors affect the analysts forecast earnings for clues do a literature review. This paper also study the current situation of Chinese and overseas related fields to do a comparison. Related research analyst earnings forecasts found in the mature markets abroad is relatively mature, the research results are very abundant. In Taiwan, due to the presence of shorter securities industry analyst, research in this field there are still many gaps, with a big gap between the West. Mainly due to domestic research analysts earnings forecasts and the West in the field have gaps are:immature environmental factors, as well as analysts factor database industry itself.The main purpose of this paper is to explore the impact of the current analyst earnings forecast accuracy of some of the factors and mechanisms of action of these factors, the study is the sell-side analysts domestic securities companies under the annual profit for the year domestic A-share market listed companies issued forecasts report. Sample data selected among the three years 2012-2014 for all domestic sell-side analysts forecast net profit of A-share listed company’s data, a total of 23,990 samples. This paper will first be defined as a dependent variable Analyst Forecast absolute accuracy through theoretical analysis, also proposed ten possible factors that have an impact on the accuracy of analyst earnings estimates as explanatory variables, and make the appropriate assumptions. Research Analyst 2012 2014 earnings forecast accuracy characteristics and causes then analyzed by descriptive statistics and GEM companies forecast data separately extracted for comparison. Finally, regression analysis confirmed a series of analyst earnings forecast accuracy influential factors, and trying to explain how these factors have an impact, but also confirmed that other factors unrelated to the accuracy of analysts earnings forecasts. The main conclusions of this article are as follows:Sell-side analysts domestic A-share listed companies to make a profit forecast and the actual level of profitability of listed companies are highly correlated, indicating that the current work of analysts seller is valuable, they effectively assume the listed companies and investors of the role of information between a bridge.2012-2014 years of data show that China’s average analysts’ earnings forecast error of 84 percent, compared with 17% of the median error variance 83. Overall, This shows the overall profitability of the domestic analysts are forecasting accuracy in the past three years is still not ideal, it also shows that domestic sell-side analysts larger differentiation in the level of business, forecast accuracy rankings analysts forecast earnings rearward error made very large. By 2012,2013, 2014 sample data of horizontal comparison, domestic analysts can be found in this year’s overall performance is not satisfactory room, but in 2013, analysts predict the degree of accuracy of polarization more serious, not prediction Some analysts predict accurately the proposed deviation larger paper argues that this is 2013 and the development of troubled macroeconomic downturn in the a-share market caused by two factors.Through the relative earnings forecast accuracy descriptive statistical analysis, we found that the domestic analysts’ earnings estimates exist of the current widespread tendency to optimism. The 2012,2013,2014 separate data comparison and found that the macroeconomic and stock market downturn in 2013 Securities analyst forecast of optimism than the other two-year low, indicating that market pessimism will affect the analysts lowered analysts listed corporate earnings expectations.Through the distribution of the relative earnings forecast accuracy interval descriptive statistics, found that only one-third higher earnings forecast accuracy, and another one-third of the profit forecast error is very large, indicating that analysts predict accurately the current market the number is not much, a lot of the profit forecast is misleading.By GEM companies predict the relative accuracy of the prediction interval and distribution of all samples were compared and found that the domestic analysts are forecasting accuracy of GEM companies are not significantly lower than the estimate for the motherboard business, but with a more intense optimism tendency. I think this is the GEM company’s own characteristics and the red-hot market sentiment common cause.By regression analysis, we identified a number of sell-side analysts currently affecting domestic earnings forecast accuracy factors:the analyst earnings forecast accuracy with the expansion of the size predicted operating income, non-operating income accounted for the decrease, reduce leverage and improve, when the business is predicted in profit or loss, analysts are forecasting accuracy will be reduced. Research analyst with the number of a company, the more earnings forecasts more accurate. The average number of analysts research companies fewer earnings forecasts more accurate. Analysts forecast earnings report release date closer the release date of the annual report, the profit forecast more accurate. Analysts earnings forecast accuracy and forecast operating income was positively related to the size from the side shows the degree of transparency of the information security market has been significantly improved.A large proportion is predicted corporate shareholders, analysts owned brokerage analyst size and its reputation had no significant effect on analysts earnings forecasts.After I will filter out the GEM sample data separate regression analysis showed that factors GEM company’s profit forecast is different:brokerage analysts belongs to the smaller size, the more accurate earnings predictions made; listed company analysts tracking increase in the number of earnings forecast accuracy will not cause a significant decrease; the larger the share of shares of major shareholders of listed companies, analysts earnings forecasts less accurate.