Research On The Impact Of Firms' Accounting Changes On Securities Analysts' Forecasts

In recent years,the situation of firms' accounting changes of listed companies in China has become more and more common.The factors such as audit opinion purchase,financial distress,differences of opinion,and cost reduction may lead to changes.The change of firms may mean the quality of accounting information of is problematic.Securities analysts are professional accounting information users and interpreters in the capital market,they announce earnings-related reports by analyzing relevant information of listed companies,including accounting information,to help investors make decisions.The information risks behind the firm's accounting changes may affect the analyst's information analysis and judgment.Therefore,how the analyst interprets the signal of firm's accounting changes,whether the firm's change will affect the analyst's earnings forecasting behavior and what the impact mechanism is are problems to be studied.Based on the theory of audit contract,information asymmetry and signal propagation,this paper selects the listed companies of Shanghai and Shenzhen A-shares from 2007 to 2016 as samples,and studies the impact of firms' changes on analyst behavior from three aspects: analyst tracking,earnings forecast accuracy and divergence.The results show that: First,the firms' accounting changes leads to a decrease in the number of analysts tracking,and a declines of the accuracy of earnings forecast,which has no significant impact on the forecast divergence.Second,the type of audit opinion and the direction of the change have an effect on the relationship between the change of the firm and the behavior of the analyst.The specific performance is as follows: the company that be issued the non-standard audit opinion in the last period and changed the accounting firm,the number of analysts tracking decreased more,and the accuracy of earnings forecast decreased more.The downgrade change of the firm(from non-"Ten" to "Ten")has a greater negative impact on the analyst's earnings forecast,which indicates that an company be suspected of purchasing audit opinion changing or manipulating earnings will lead to greater negative impact.Third,using manipulative accruals as a measure of accounting earnings quality,it is found that accounting earnings quality is a mediator of firm changes and analysts' earnings forecasts,and firm changes affect analysts' earningsforecasts by reducing the quality of accounting earnings.This paper expands the economic consequences of firm changes and the influencing factors of analysts' earnings prediction behavior,and provides evidence for the link between firm changes and analyst predictive behavior;In particular,the research in this paper analyzes the deep mechanism of firm changes affecting analyst behavior,and greatly enriches the literature in related fields.The research results of this paper also provide reference for the regulatory authorities to strengthen independent audit supervision,improve the information quality of listed companies,and investors' interpretation of firm changes and related investment decisions.