An Empirical Research On Optimism Bias Based On Analyst Conflicts Of Interest Perpective

Through comprehensive analysis of the macroeconomic performance and the corporation operating conditions and development potential,analysts publish the earnings forecast research report,which becomes the main basis for investors’ decision making.However,the analysts have a serious negative influence.In the market of information asymmetry,analysts play a role of bridge over information transmission,and analysts can not avoid a variety of conflicts of interest,which are mainly from the management,the institutional investors,the brokers brokerage,the investment bank and the proprietary trading.From the perspective of from the listed companies management stress,this paper probes into the impact of this conflict of interest to analysts’ optimistic bias.On one hand,the management becomes an important source of private information,and the analysts will maintain good personal relations with the management to obtain more information;on the other hand,management may figure out the analysts’ concerns to make their induction,making analysts provide the reports conducive to the company.In that way,it will lead to conflict for analysts to make prediction in the behavior of their natural information providers.Thence,it is of significance to study the relationship between conflict of interest and analyst’s optimism.In addition,the transparency of information represents the public information of listed companies,and sufficient public information can help analysts reduce dependence on private information,in which case it will weaken the positive effect of the conflict of interest on the analyst’s optimistic bias.Based on the data of A-share listed companies collected from Shenzhen Stock Market from the year of 2012 to 2014 and by establishing a model,this paper tends to verify whether the conflicts of interest between management and analysts have an impact on the optimism bias on analysts’ earnings forecast and explores further whether the transparency of information can affect the relationship between above two.The results show that:(1)conflicts of interest can facilitate the phenomenon of optimistic bias on analysts making earnings forecast,but for the best analysts,the influence is inferior;(2)If the listed company has a high information disclosure evaluation results or high quality of performance forecast,it will significantly reduce the impact of conflicts of interest on the analyst’s optimistic bias,indicating that the higher the transparency of information,the weaker relationship between the two will be.By drawing on the research of analyst’s earnings forecast in the past,and according to the characteristics of China’s securities market,this paper further explores the influencing factors of analyst’s optimism deviation.From two dimensions of the conflicts of interest and information transparency,this paper explores the optimistic bias behavior of analysts’earnings forecast and analyzes the causes of this relationship profoundly,and the research results are universal.The research results of this paper not only complement the theoretical research and the related literature of the analyst’s optimistic bias tendency,but also help to improve the effectiveness of the securities market and improve the efficiency of resource allocation.The results of this study will also provide effective suggestions on how to regulate the relevant departments to regulate and guide the behavior of analysts.