Buyers' Pressure,Institutional Shareholding And Analysts' Forecast Bias

In the Capital market,security analysts tend to release more optimistic forecasts facing the buy-side pressure from clients of institutional investors.At the same time,institutional investors as the shareholders of companies,will supervise relevant information of the companies in a certain extent.Thus,the paper investigates how the client pressure and institution holding affect analysts' forecast accuracy.We find that the interest conflicts from the buy-side client pressure will significantly increase analysts' optimistic bias.Because the good news will attract more investors,promoting the stock prices,so that add their clients' rewards.And institution holding obviously decreases optimistic bias of analysts' forecast.On one side,institution holding will improve the quality of information disclosure.On the other side,institutional investors want to be able to get more real corporate development situation,so as to optimize the distribution of the portfolio,and increase the income of their portfolio.Otherwise,the improvement of institution holding on the margin,will obviously correct the analysts' optimistic bias caused by the buy-side client pressure.Facing multiple pressure,especially when there is a obvious conflict between them,analysts will more consider their own future and reputation,together with the pressure from relevant institutional investors,thus analysts' predict positive deviation is reduced.The article also discussed whether or not to need to consider the analysts forecast deviation direction,with absolute value and common value.The result said that the direction of the analysts predict deviation did not significantly affect the outcome.The results in this paper will provide clear references to regulators with further standardizing information transmission in the capital market and guide investors how to understand analysts' forecast.