Research On Earnings Forecast Accuracy And Market Influence Of Securities Analysts Based On Reputation Model

With the professional knowledge and analytical skills,securities analysts are generally considered to have the information interpretation and high predictive ability of earnings information of listed companies,can be more comprehensive and consistent analysis,estimation and prediction of the effect of the information on the stock price,and give the rating suggestions.Although the securities analysts industry in China started late,but now it develops swiftly.Star analysts such as “New Fortune Best Analyst ”contest also greatly increased the exposure rate of securities analysts,the public fans star analysts' earnings forecast,this situation may affect investors value judgment.So,it becomes the hot topic nowadays if securities analyst can affect the market as shown in the status quo.At present,the conclusion in academic community that securities analysts through the information model or reputation model affect the market is controversial,the existing literature does not explain how the two models affect the market.This paper attempts to analyze how a securities analyst affects the market,so based on the relevant data of earnings analysts' earnings forecast behavior,makes a simple analysis using the descriptive statistical method,and uses the selected formula to measure the accuracy of earnings forecast of our current securities analyst to compare the differences between the accuracy of the star analyst and the general analyst of earnings predictions.Then the pearson correlation coefficient test obtained the relevance of each variable.After the overall forecast,the selected securities analysts were divided into star securities analyst,general securities analyst and the overall sample,and analysed panel data to determine which model affects the market,and made robustness test.Finally,we use the event research method to test how the securities analysts under different ratings impact the market to obtain the empirical results of this paper.The empirical research shows that securities analyst reputation affects the market by stock abnormal return volatility.Firstly,Chinese current securities analyst earnings forecast lack of accuracy,the securities analyst reputation(star)can be considered for the securities analyst earnings forecast accuracy(pmafe)play an important role.Secondly,the experience of securities analysts(exp)and early stock price(esp)can be considered the positive correlation with securities analyst earnings forecast accuracy(pmafe).Follow company number(fcn)and analysts' gender(sex)showes a significant negative correlation to the securities analyst earnings forecast accuracy(pmafe)in the general and overallsecurities analysts,and the less company number concernes by the securities analysts at the same time,the better accuracy of prediction they can get,the skill of female analysts in the earnings forecasting is also likely to be higher than male.The forecast numbers of securities analysts' earnings forecasts(fn)show a significant positive correlation to the securities analyst earnings forecast accuracy(pmafe)in the general and overall securities analysts,the constant revision of the earnings forecast of the same company will help improve the prediction accuracy.Education(edu)is significantly negatively correlated with earnings forecast accuracy(pmafe)only in the category of star analysts,the higher degree does not represent the practice ability of analysts is better.Thirdly,whether it is a star or a general analyst,there is no way in the short-term for them to bring abnormal returns to investors,because securities analysts can use the reputation to predict the value of the stock,but can not predict short-term stock prices.however,the star analyst certainly uses reputation to bring a sharp fluctuations in stock abnormal return,affecting the market.Finally,the short-term cumulative abnormal return(car)of the low-priced shares(the average of the sample as the dividing point,the early stock price is less than or equal to 20 yuan is defined as low-priced stocks)is greater than the high-priced stocks(the early stock price is more than 20 yuan is defined as high-priced stocks)in the buy and hold rating.The short-term cumulative abnormal return(car)of the stock on the much experience(the average of the sample as the dividing point,the experience more than 3 year is defined as much experience)is greater than the little experience(the experience less than or equal to 3year is defined as much experience)in the general and overall securities analyst.So,according to the research results of this paper,in order to improve the accuracy of securities analysts' earnings forecasts and help investors recognize the way of market influence to make effective investment,four suggestions are put forward in this paper:focus on experience accumulation and practice,pay attention to securities analysts but not blindly,establish a sound incentive mechanism for analysts and reshape investor investment habits.