Research On The Impact Of The Divergence Between Managers' And Analysts' Earnings Forecasts On Analyst S' Subsequent Forecast Quality

The difference in information sources and information processing capabilities between managements and analysts has led to the divergence between the two earnings forecasts.The managements' forecasts are based on the forward-looking information including the company's performance.This information is usually closely related to the company's actual operating conditions and future development plans.It is more in line with the needs of analysts' earnings forecasts so that the managements' forecasts can be an important source of information for analysts' forecasting.Because there are different strengths between managements and analysts,managements' forecasts may be seen as a complement to analysts' forecasts,especially when there are divergence between the two earnings forecasts.This paper selects the divergence between managements' and analysts' earnings forecasts as the entry point,and studies the impact of the divergence of the two forecasts on the analysts' earnings forecast error.Based on the theoretical basis of principal-agent theory,information asymmetry theory and signal theory,this paper expounds the information superiorities of managements and analysts,and analyzes the analysts' learning ability.It is theoretically derived that analysts can learn from the divergence between managers' and analysts' earnings forecasts,which can reduce the analysts' forecasts errors.Subsequently,this paper chooses the data of A-share listed companies from 2006 to 2017,and examines the impact of the divergence between managers' and analysts' earnings forecasts on the analysts' forecast error after the release of the managements' earnings forecast,and further considers whether the analysts can obtain new information from the managements' forecast and reduces the forecasts error in different situations such as the regulatory industry,mandatory disclosure,product market competition and the credibility of the managements' forecasts.The empirical results show that:(1)The divergence between managers' and analysts' earnings forecasts can reduce the analysts' forecasts error.(2)In the regulatory industry,mandatory disclosure,fierce competition in the product market,and more reliable managements' forecasts,analysts can obtain more new information from the divergence between managers' and analysts' earnings forecasts,and the analysts' forecasts error reduces more significantly.In addition,this paper changes the measurement method of the analyst' forecasts error to conduct the robustness test.The above conclusion is still valid.The conclusions of this paper indicate that managements and analysts have different information advantages,and analysts have the ability to learn and obtain new information from managements' earnigns forecasts to improve their earnings forecasts accuracy.And the research also provides a reference for relevant regulatory authorities to improve the information efficiency of capital markets and investors' correct understanding of analysts' earnings forecasts.