Research On Analysts' Professional Background And Earnings Forecast Bias

Securities analysts are the main body of information collection,collation,analysis and transmission in the capital market.Compared with ordinary investors,analysts can collect public and private information in the market at a lower cost and through broader channels,and interpret and analyze the information based on their knowledge,and finally provide the collated information to market participants.Their works have an important impact on helping improving the investment returns of investors and the efficiency of market resource allocation.Thus,the study on analysts' forecast is of great significance.However,due to the interaction between analysts' forecast and other various factors,the research based on analysts' forecast is prone to have endogeneity problem,which reduces the reliability of conclusions.In order to avoid the influence of endogeneity problem as much as possible,this paper chooses the implementation of Consistency Evaluation as an external impact to separate the causality.Based on the natural experiment environment during the implementation of Consistency Evaluation,this paper studies the impact of securities analysts' professional background on their earnings forecast bias.Firstly,this paper combs the relevant literature of analysts' forecast bias research,and finds out the entry point of the research.Then,it reviews and states the efficient market hypothesis,information asymmetry theory and herd effect theory,combing with the content and impact of Consistency Evaluation,and based on which five research hypotheses are put forward.Finally,it selects the EPS forecast data of listed companies in pharmaceutical industry of Shanghai and Shenzhen A-shares from 2013 to 2017.The empirical test was carried out with a total of 2993 observations as the research samples.Finally,the following conclusions are drawn:(1)After the formal promotion of consistency evaluation,the analyst's earnings forecast bias will be significantly reduced;(2)For the analysts with medical-related professional background and those without relevant professional background,the earnings forecast bias will both be significantly reduced after the promotion of Consistency Evaluation;(3)The professional background of analysts can significantly reduce their earnings forecast bias both before and after the promotion of the Consistency Evaluation.Finally,according to the research conclusion,suggestions from three aspects are put forward aiming at improving the efficiency of capital market operation,which can be summarized as follows:(1)Securities firms should train analysts according to their own characteristics;(2)Investors should refer to analysts' research reports properly instead of blindly following;(3)Relevant departments should continue to strengthen the information coverage of listed companies,and improve the information environment of capital market.