Research on the Impacts of Analyst Forecasts on Management Earnings Forecasts—Evidence from China

Abstract

This paper investigates the effects of analyst forecasts on management earnings forecasts in Chinese forecasting environment. The empirical results show that: The pessimistic forecasts bias encourage listed firms disclose earnings forecasts more timely and accurate to correct the market expectation of earnings; managers will make more précised forecasts when analyst forecasts dispersions are high. The results imply that, analyst forecasts have great impacts on management earnings forecasts, which is not only restricted by government, but also affected by other market participants. This paper sheds new light on the research on the relationship between analyst forecasts and management earnings forecasts in China.