Research On The Influence Of Expectation Management On Consistency In Meeting Or Beating Earnings Expectations Based On Analysts Forecasts

As a special phenomenon of capital market,consistency in meeting or beating earnings expectations(CMBE)have received wide attention from both academia and practitioners.Prior research has shown that the stock market rewards firm's CMBE,managers have incentives to sustain CMBE.So what are the causes for CMBE of Chinese listed companies?Analysts' cash flow forecasts are more objective with value-relevant information.At the same time,analysts' cash flow forecasts is considered to constitute an in-depth analysis of the results of the surplus in the capital market to play the role of external governance.Then analyst' cash flow forecasts would weaken the possibility of CMBE for its private interests?This paper is not only adds to the literature on earnings surprise,but also found CMBE motivation and economic consequences of analyst' cash flow forecasts.It help investors understand the behavior prediction of analyst and management,make more effective investment decisions.This paper uses prospect theory,signal transmission theory,principal agent theory,reputation theory,resource dependence theory,expectations violations theory.Based on the data of 2010-2016 Chinese-listed firms,this paper means to explore the effect of expectation management and analysts cash flow forecasts on CMBE.And further more we do research on the adjustment effect of analysts cash flow forecasts on CMBE.We find firstly that there underlies a positive relationship between expectation management and CMBE.And analysts cash flow forecasts can reduce CMBE.Furthermore,analysts cash flow forecasts also can reduce the positive effect of expectation management on CMBE.Based on the above research findings,the paper finally proposes policy recommendations to improve the management earnings forecast disclosure mechanism,encourage analysts to publish cash flow forecasts to play the role of external governance and promote the normative development of analysts.