Research On The Analyst Following Supply Chain And The Accuracy Of Earnings Forecast

"The Survey Report on the Investor Relations Management of Listed Companies in 2019" released by the Shenzhen Stock Exchange pointed out that investors are most concerned about the performance and expectations of listed companies,and more concerned about the short-term performance influencing factors.But listed companies hope to pass on information related to the company's future development strategy to the public,in order to gain long-term support from investors.As an intermediate bridge between investors and listed companies,by digging up information about the value of listed companies and forming forecast reports,securities analysts can make up for the inadequacy of information in the market.Enterprises along the supply chain directly interact through the trade relationship,the economic transaction between the two firms conveys value-related information to the market and will also affect the forecasting behavior of the securities analyst.The economics connection between suppliers and customers is complex and ever-changing,what kind of influence it will have on the following decision of securities analysts and how it will affect the accuracy of earnings forecast should be studied as an important issue.Especially in the face of the rapidly changing Chinese market,the impact of supplier customer relationships on securities analysts should attract the attention of scholars.Therefore,this article also chose this topic for research.When sorting out the previous researches,this paper finds that most of the existing research studies the securities analyst's earnings forecast behavior from the perspective of the securities analyst's characteristics and the internal governance issues of the predicted company,as well as the interaction between suppliers and customers in the supply chain.This paper starts from the phenomenon of information transmission along the supply chain,and study the behavior of analysts following along the supply chain and analysts' earnings forecast accuracy.Based on data of China's stock market from 2007 to 2018,this paper first uses regresion analysisis to examine the impact of economic connection and social capital on securities analysts' following decisions;then through two-stage least squares and group regression methods,we tested the impact of analysts' following decisions and social capital on the accuracy of earnings forecasts.The empirical results of this paper show that:(1)The economic connection between suppliers and customers will have a significant impact on the following decisions of securities analysts.The specific performance is that the greater the percent of sales of customer companies,the higher possibility of securities analysts following;(2)Securities analysts' following decisions will also be significantly affected by social capital: when the percent of accounts receivable between suppliers and customers is higher,the possibility of securities analysts following is higher;when there is a related party relationship between the suppliers and customers,securities analysts are more likely to follow;when the property rights of suppliers and customers are the same,securities analysts are more likely to follow;(3)The accuracy of earnings forecasts of securities analysts is significantly affected by analyst following and the nature of property rights: securities analysts follow the major customers will improve the accuracy of earnings forecasts for supply companies;when considering the impact of the nature of property rights,the following decisions of securities analysts are significantly correlated with positive earnings forecast errors,and the nature of property rights is significantly correlated with negative earnings forecast errors.