Does The Auditor Reputation Affect The Accuracy Of Analyst Earnings Forecast?

In the current domestic audit market,the policy of encouraging the firm to “being bigger and stronger” is in the ascendant.In November 2016,the CICPA proposed to establish the accounting firm's brand as an important supporting measure to further promote the strategy of “being stronger and bigger” during the “Thirteenth Five-Year Plan” period,with the intention of guiding accounting firm to establish a brand and manage the brand.Brand is a carrier of the reputation,and the formation process of the auditor's brand is also the process of gradually strengthening the auditor's reputation.High-reputation auditors often mean high-quality audit services,which help to alleviate information asymmetry in the capital market and optimize market resource allocation.In the capital market,securities analysts can also guide the allocation of resources through earnings forecasts.Whether the auditor's reputation could influence the analyst's earnings forecast and plays a complementary role? Current researches not answer that question.Based on that,this paper divides the release time of the analysts' one-year earnings forecast(Earnings forecast on T year)into three periods(?,?,?)by analyzing the impacts of auditor reputation on the accuracy of analysts' earnings forecast.These three periods are within 30 days after the announcement of the company's T-1 year annual report,the 31 st day after the announcement of the T-1 year annual report to the 31 st day before the announcement of the T year annual report,and within 30 days before the announcement of the T year annual report.Based on the correlation between the accuracy of analysts' earnings forecasts published in these three intervals and the auditor's reputation,research hypotheses are proposed.This paper choose 2008-2017 A-share listed companies and analysts reports as the example,using regression analysis,mediation effect analysis and other methods,to test how the auditor's reputation affects the accuracy of analysts' earnings forecasts over three periods.The results show that,if analysts publish earnings forecasts during Period I,the company's T-1 year annual report is an important reference for analysts,the T-1 year high reputation auditor can provide analysts with more accurate accounting information to improve analyst prediction accuracy;During Period II,as the amount of information available to analysts increased,the utilization degree of the T-1 year annual report weakened,so the correlation between analyst forecast accuracy and T-1 year auditor reputation weakened,and the forecast has not yet formed a market expectation in that time,the forecast accuracy has no significant relationship with the T year annual auditor's reputation;During the period III,the earnings forecast released by the analysts played the role of market expectations,if the company's actual surplus is not higher than or only slightly higher than analysts' expectations,the high reputation auditor can restrain the company's earnings management from “catering” analysts' expectations,at this point,the analysts' forecast accuracy is negatively correlated with T year annual auditor reputation,but if the company's actual surplus is much higher than the analyst forecast,that the negative correlation disappeared.By combing the release time of analysts earning forecast,we can better understand the impact mechanism of auditor reputation on the accuracy of analysts' forecasts,and refine the research on auditors and analysts' earnings forecasts.At the same time,this paper also demonstrates the importance of auditor reputation.High reputation auditors can provide investors,analysts or other relevant personnel with more accurate accounting information,helping analysts to correctly guide investors,and reducing negative impacts on the market caused by the over-optimism of analysts.The auditing industry should maintain the strategic guidance of “being bigger and stronger”,vigorously develop and build auditor brand,which could help auditor to play a greater role in the healthy development of the domestic capital market.