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Meeting or Beating Analysts' Earnings Forecasts and the Disciplining Role of Analysts--- Evidence from China
|Abstract:||本研究計畫係屬三年期計畫，為「財務資訊中介者行為模式、績效、與盈餘、 股價預測」整合型計畫之子計畫一，因證券分析師在中國資本市場已佔有重要地 位，證券分析師對於公司股價具相當影響力。當中國上市公司宣告盈餘未達到分 析師盈餘預測時，股價將有負面影響，使公司有誘因達到分析師盈餘預測門檻。 因此，本計畫第一年旨在探討中國上市公司運用盈餘管理，以達到分析師預測門 檻之行為。本研究亦擬檢視，相較於同時達到分析師盈餘預測及主營業利潤預測 門檻之公司，僅達到一項預測門檻之公司，其市場反應為何。此外，本研究檢視 相較於未利用盈餘管理達到分析師預測門檻公司，運用盈餘管理達到門檻公司， 其股票報酬是否較低。 中國上市公司特有股權結構、經理人員具政治背景與否、所處省分組織環境、 機構投資人持股等因素，對上市公司運用盈餘管理達到分析師預測門檻行為應有 所影響，是以，本計畫第二年擬檢視股權結構、上市公司所處省分組織、經理人 員是否具政治背景、機構投資人持股等因素，對公司運用盈餘管理達到分析師預 測門檻可能性之影響。此外，本研究擬檢視內部控制自我評估法規之實施，對公 司運用盈餘管理達到分析師預測門檻可能性之影響。因外國機構投資人大部分根 據外國券商研究部門分析師所提供研究報告進行其投資決策，因此，外國券商分 析師盈餘預測對中國A 股影響力逐年增加。本計畫第三年擬探討外國分析師對中 國分析師盈餘預測行為之影響。本研究亦檢視相較於中國分析師，外國分析師是 否較即時修正其盈餘預測。 本研究計畫之研究成果，除可與「財務資訊中介者行為模式、績效、與盈餘、 股價預測」整合型計畫之其他子計畫進行整合分析，對於分析師行為研究與分析師 研究報告對經理人員影響之相關研究具學術貢獻。|
Financial analysts play an important role in firm valuation by providing benchmarks to evaluate performance. Publication of earnings forecasts and recommendations issued by sell-side analysts has been recognized popular in China since 2001. Although there is anecdotal evidence that share price declines associated with small negative earnings surprises, prior literature has not examined whether such stock response is systemic in China. Furthermore, no studies investigate whether Chinese listed firms may manage earnings to meet the consensus forecasts. To fill the gap, the first year project will examine whether Chinese listed firms may manipulate earnings to meet the consensus forecasts. Recent studies document a market premium (penalty) to the act of meeting or beating (failing to meet) analysts’ earnings forecasts even after controlling for the magnitude of the forecast error. Thus, this study investigates whether the market rewards firms meeting current period earnings expectation. This study also examines the market response to the joint acts of meeting profits from main operations forecasts and earnings expectations. Furthermore, some studies find that the market premium is marginally lower for firms meeting analysts’ expectations with earnings management. Hence, this study will examine the equity premium when Chinese listed firms appear to be engaging in some form of earnings management to meet analysts’ expectations. In the second year project, this study will examine whether firms with the following characteristics are more likely to meet or beat analysts’ expectations: (1) the extent of state ownership, (2) the level of market and legal institutions’ development, (3) politically connected CEOs, and (4) the percentage of institutional ownership. To improve the quality of financial statement, the Chinese regulators require that Chinese listed firms must provide the assessment of the effectiveness of internal controls after July 2009. I hypothesize that the passage of regulations for internal control self-evaluation may limit managers’ ability to manipulate earnings. Thus, this study will examine whether the implementation of regulations may affect managers’ actions to manage earnings to avoid missing analysts’ expectation. Foreign investors became more interest in China’s stock market. Most of foreign investors rely on the reports provided by foreign analysts working for foreign brokerage. Thus, foreign analysts play an important role in the Chinese stock markets. In the third year project, this study will investigate whether the presence of foreign analysts disciplines the behavior of Chinese analysts that follow the same firms. Furthermore, extant studies find that investment banking ties influence the speed with which analysts convey unfavorable news. Because Chinese regulators have grown increasingly concerned with the conflicts of interest that sell-side analysts face in China, I hypothesize that Chinese analysts prefer not to issue bad news about client companies. Thus, this study will investigate whether foreign analysts release earnings forecasts timelier than Chinese analysts who follow the same firms. Finally, this project will investigate whether the incremental contribution by foreign analysts is significantly larger than that by Chinese analysts. The issues addressed in this study can collaborate with other subprojects in the integrated project “Investigating the Behavior and Performance of Financial Information Intermediaries, as well as Earnings, and Stock Prices Forecasts”. Furthermore, this project contributes to the literature on the analyst behavior and capital market. The empirical results can provide valuable implication for whether Chinese listed firms manipulate earnings to meet or beat analysts’ earnings forecasts.
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