Research On Analyst Forecast And Cash Holdings

Cash is an important strategic resource of a company,which is called the "blood" of an enterprise.The cash holdings determines the normal operation and sustainable development of an enterprise.In recent years,the problem of corporate cash holdings has attracted extensive attention from scholars at home and abroad,who generally find that the existence of information asymmetry will affect corporate cash holdings.At the same time,securities analysts are playing an increasingly important role in China's capital market.As professional information interpreters,they create incremental information for the market,which can alleviate the information asymmetry between enterprises and investors,and thus may affect the cash holding motivation of enterprises.However,no one studies the relationship of them directly.Moreover,in China,the analyst industry started relatively late compared with foreign countries,and whether its role in China's market is as expected by theory remains to be explored.Therefore,this paper intends to explore whether and through what mechanism and path the analyst affects the cash holdings of enterprises,which has a certain practical significance.This article selects the a-share of Shanghai and Shenzhen main board listed companies from 2010 to 2016 as the research object,researches the analysts' impact on the corporate cash holdings from the perspective of information environment,and explore whether the analyst can reduce the degree of information asymmetry between enterprises and investors to affect enterprise's financing constraints and agency costs,in turn,affect the enterprise cash levels,in order to find factors affecting the corporate cash holdings from a new angle.Considering the heterogeneity of analyst forecasts,quantitative analysis alone is not enough to explain the role of analysts.Therefore,the accuracy of analyst forecasts and the degree of forecast divergence are taken as proxy variables of the information environment to study their impact on the cash holdings.Furthermore,the relationship between analyst forecasts and cash holdings is further examined when the property nature of the company and the shareholding ratio of institutional investors who play a similar role in the capital market are different.The main conclusions of this paper are: the more analysts coverage,the lower the cash holdings;The higher the accuracy of analyst prediction,the lower the cash holdings;The smaller the degree of divergence,the lower the cash holdings.It shows that the ?increase in the number of analysts' forecasts,the improvement of prediction accuracy and the reduction of forecast divergence can affect the cash holdings of enterprises by reducing their financing constraints and agency problems.Further research shows that the relationship between the number of analyst prediction and the degree of divergence and cash holdings are more significant in non-state-owned enterprises than in state-owned enterprises but.The relationship between the number of analyst prediction and the degree of divergence and cash holdings are also more significant when institutional investor holdings are lower than when institutional investor holdings are higher.However,this conclusion is not found between prediction accuracy of forecast and cash holdings.The innovation and contribution of this paper are:First,different from existing research,based on the perspective of information environment,this article adds to the factors influencing the cash holdings and the research on economic consequences of analysts predict.Second,it is based on both the "financing constraints" and the "agency cost" theory to discuss and analyze in order to clarify the relationship between the analysts forecast and the cash holdings.The inspiration of this paper are:First,it is necessary to standardize the professional standards of analysts,improve the overall quality and independence of analysts,and promote analysts to provide more accurate earnings forecast.Second,Improve the information disclosure system of listed companies to improve the transparency of enterprise information.Last but not least,Strengthen the requirements and supervision on the behaviors of the executives of listed companies in order to reduce the information asymmetry at the root.