The Impact Of Experience In Relevant Industry On Analyst's Professional Performance

As an information intermediary to reduce the information asymmetry among market participants,the sell-side analysts is still in its infancy in China,where the capital market is not perfect,which is restricted by the relatively low level of capital market perfection and the relatively inadequate institutional and legal constraints.In its rapid development the sell-side analyst also exposed scandals.It is necessary for institutional investors to look for outstanding analyst who can provide more accurate investment advice among the intermingled sell-side analysts.According to many surveys,professional knowledge is the characteristic that institutional investors most concerned about.Analysts with relevant industry working background and relevant professional education background tend to have a more adequate and deeper understanding of the industry.Therefore,this paper focuses on(1)the accuracy of the analysts' earning forecasts based on their professional experience in the relevant industries;(2)whether an analyst with professional experience is more likely to be an allstar analyst,;(3)stock price impact of industry experience on rank revisions;(4)the relation between stock price synchronicity and analysts' industry experience.The results of this study show that,first,relevant industry experience can effectively reduce the earning forecast error;second,analysts with relevant industry professional experience are more likely to be an allstar analyst;third,the market has a slightly greater response to analysts' rank revisons with relevant industry experience;fourth,analysts with relevant industry experience can reduce the stock price synchronicity by digging up more company-level idiosyncratic information.At the same time,in the course of the research,it is also found that analysts' professional experience in relevant industries can not help them to make more accurate earning forecasts for companies with better information disclosure levels than their peers.The information mining advantage brought by relevant industry working experience to analysts is higher than that of relevant professional education background.At the same time,institutional investors are more likely to believe in investment advice from better-reputed analysts than analysts with relevant industry expertise.In addition,this article also found that different brokerage houses have different preferences for the analyst training mechanism,and large-scale brokerage houses tend to train talents with complex backgrounds who walk out of the campus.And small-scale brokerage houses are more willing to accept the outstanding analysts from big brokerage houses.From the results of this study,it can be seen that it is an important way to improve the research level and reputation of brokerage houses in a short period of time by actively absorbing outstanding analysts with professional experience in the relevant industries.The advantage of this kind of talents is mainly reflected in excavating the deep-seated information of the companies with poor information disclosure quality.For the companies with better information disclosure quality,it doesn't work.Therefore,improving the information disclosure policy,continuously strengthening the standardization and rectification of the analyst industry,and seriously punishing private blending,insider trading,and so on,are keys to improve the analyst team,enhance its information intermediary role in the capital market and optimize the efficiency of capital allocation.They are also the realistic basis for the opportunity equity of the analyst industry in our country.