Research On The Influence Of Rich List On Analyst Visits

As an effective channel for the public to understand the rich class,the annual release of the rich list will become the focus of the capital market.The public attention caused by the rich list will have a huge impact on the information environment of the capital market.However,there are few studies focus on the impact of the rich list on analysts,an important information intermediary in the capital market.Therefore,it is necessary to clarify its impact on this information intermediary.In view of this,this paper will explore the impact of the rich list on analyst behavior.Specifically,this paper uses the exogenous event that the firm controller first appeared on the Hurun Rich List to explore the impact of the rich list on the important information acquisition behavior of analysts – site visits from the perspective of public attention,and further explore the economic consequences of site visits.With the gradual improvement of China’s capital market,the role of analysts in the capital market has become increasingly prominent.The main task of the analyst is to collect and analyze the information of firms,and make an analysis report on the target firms for investors’ reference.Therefore,the services provided by analysts not only affect the investment decisions made by investors,but also affect the information environment and operating efficiency of the capital market.Information sources are the basis for analysts to provide professional services.The information sources of analysts mainly include public information and non-public information.According to the efficient market hypothesis,with the continuous improvement of the effectiveness of China’s capital market,analysts will rely more on non-public information to help investors obtain excess returns.Site visits is the most effective way for analysts to obtain non-public information,which can help them understand the most real business situation of the firm and improve the quality of professional services.At the same time,site visits will also have a significant economic impact on firms.However,site visits needs considerable time and energy costs,and analysts usually do not conduct site visits on all firms.Under what circumstances will analysts choose to conduct site visits on firms? At present,there are few literatures on the influencing factors of analysts’ visits,and there are research gaps.Therefore,this paper takes this as the starting point,selects the firm controllers first appear on the Hurun Rich List as an exogenous event,and explores the impact of the rich list on analysts’ visits from the perspective of public attention.Taking A-share listed firms from 2007 to 2019 as the research sample,and using the differences-in-differences method(Di D),this paper conducts an empirical study and draws the following conclusions: First,after the firm’s controller first appearing on the Hurun Rich List,the number of analysts’ visits increases significantly.After a series of tests like parallel trend test,placebo test and propensity score matching test,the results are still stable.Second,the positive impact of the rich list on analysts’ visits is more significant in firms with higher earnings management,firms with lower governance,firms with closer political and business relationships and firms with poor information disclosure quality,which proves that the rich list has led to the intensification of information divergence related to firms,leading to the increase of analysts’ visits.Third,in further research,it is found that the analysts’ visits significantly improves the accuracy of analysts earnings forecasts,reduces the volatility of the stock price of the visited firms,alleviates the constraints of the commercial credit financing of the visited firms,and improves the performance of the visited firms.The contributions of this paper are mainly reflected in the following aspects: First,it enriches the relevant research of efficient market hypothesis and information asymmetry theory.Analysts have effectively alleviated the internal and external information asymmetry of firms.However,most of the current research on analyst information acquisition focuses on the acquisition of public information.In the context of the gradual improvement of the effectiveness of China’s capital market,it is of great significance to study the non-public information of analysts.This paper takes the most effective way for analysts to obtain non-public information – site visits as the research object,which enriches the relevant research of efficient market hypothesis and information asymmetry theory.Second,it enriches the research on analyst behavior and the rich list.As a representative means for analysts to obtain information,site visits not only helps analysts improve the quality of professional services,but also has an important impact on firm performance and the information environment of the capital market.Therefore,it is meaningful to explore the motivation of analysts’ visits.The results of this paper not only supplement the relevant literature of the influencing factors of analysts’ visits,but also provide a new reference for the research on the economic impact of the rich list.Third,it helps all parties understand the process of analyst information collection and make better decisions.As an important link that affects the quality of information transmitted by analysts,site visits has an important impact on firms and capital markets.The results of this paper help to open the “black box” of analyst prediction behavior,and provide a literature reference for management and investors to understand analyst behavior and make rational decisions.