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Analyst earnings forecast under complex corporate ownership in China

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  • Huang, Wei
  • Wright, Brian

Abstract

This paper investigates stock analysts’ earnings forecasts under complex corporate ownership in China. Based on a sample of 1298 firms for years 2004–2011, our evidence suggests that state shareholding is negatively related to the quality of consensus analysts’ earnings forecasts. In particular, it is associated with stronger upward bias, and larger ‘inaccuracy’. We also show that higher percentages of tradable shares, A-shares, block tradable shareholdings, and institutional shareholdings improve forecast quality. Further robustness tests suggest block shareholding, irrespective of the shareholder type (state/tradable/institutional), is associated with lower probabilities of downward forecast revisions later in the year.

Suggested Citation

  • Huang, Wei & Wright, Brian, 2015. "Analyst earnings forecast under complex corporate ownership in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 35(C), pages 69-84.
    • Handle: RePEc:eee:intfin:v:35:y:2015:i:c:p:69-84
    DOI: 10.1016/j.intfin.2015.01.003
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    3. Wei Huang & Agyenim Boateng & Alexander Newman, 2016. "Capital structure of Chinese listed SMEs: an agency theory perspective," Small Business Economics, Springer, vol. 47(2), pages 535-550, August.
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    5. Liao, Jing & Malone, Chris & Young, Martin, 2016. "Politicians, insiders and non-tradable share reform decisions in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 58-73.

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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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