Empirical Study Of The Relationship Between Management Forcast Reports And Investment Quality

Making investment decisions is one of the most important duties of the management of a company.The key to the success of investment decision depends on the management’s ability to predict the project income and ultimately affects the efficiency of enterprise resource allocation.However,this prediction belongs to the internal behavior of the company,and it is difficult for external investors to observe directly in advance.Competent managers have an incentive to the investors through disclosure of earnings forecast more accurate information transmission capacity,the stronger the ability of managers,collecting,processing and forecasting information ability is stronger,the higher the accuracy of earnings forecast is also so.In this way,the accuracy of the earnings forecast disclosed by the management may become an important information for the external investors to observe the prediction ability and investment quality of the management.Given that the management has the same forecasting ability in the profit forecast and investment decision,does the management’s profit forecast include the company’s investment quality information? In order to prove this point,this paper takes 2008-2017 A-share listed companies in our country as samples,we found that: quality is significantly positively related to profit forecast accuracy and investment management,and when the degree of environmental uncertainty and information asymmetry degree is high,the management profit forecast accuracy is more sensitive to positive relationship between investment and quality.In conclusion,the results show that management earnings forecasts contain important information about the quality of corporate investment.This paper may have the following contributions: first,it studies the relationship between management’s profit forecast and investment decision from the perspective of forecasting ability,which is helpful to enrich the existing literature on the influence of management’s individual characteristics on corporate decision-making behavior.Secondly,this paper analyzes the important role of management forecasting ability in earnings forecasting and investment decision-making,which expands the literature of management earnings forecasting and investment decision-making.In the existing research,management earnings forecast and company investment decisions are regarded as different research branches.Thirdly,the research of this paper confirms that the management’s profit forecast contains other information of the profit forecast,that is,it reflects the prediction ability of the management and its related investment quality.In the current institutional environment where small and medium-sized investors in China’s capital market are generally faced with severe information asymmetry,the research conclusions are of great practical significance for small and medium-sized investors to make investment decisions,and provide some practical references for the regulators in China’s capital market to further improve the management profit prediction system.