Research On The Accuracy Of Management Earnings Forecasts And Its Influencing Factors

As the capital market develops quickly and investors are becoming wiser,companies have to show their good profitability and development to the investors togain cheaper capitals and the disclosures of the management earnings forecasts canhelp them to achieve the goal. At the same time, accurate management earningsforecasts can help investors make wiser decisions. Therefore, the study of theaccuracy of management earnings forecasts and its influencing factors can help themanagement and investors make better use of the information.Firstly, the research theories and results both at home and abroad were reviewedand literatures on the effects of factors in the corporate governance and financialconditions fields were looked through. Then the factors of number of directors,percentage of independent directors of directors, percentage of shares held by seniormanagers and the percentage of shares held by the greatest five shareholders wereidentified to stand for the corporate governance. The factors of the debt to asset ratio,the return on assets, the company size and operating cash flow per share were chosento stand for the financial conditions. The paper collected and selected data from2010to2012and respectively carried out a regression analysis for the years. After theanalyses, the paper reached the following conclusions: from the respect of corporategovernance, the number of directors and the percentage of independent directors ofdirectors were positively related to the accuracy of the management earningsforecasts; the percentage of shares held by senior managers and the percentage ofshares held by the greatest five shareholders were negatively related to the accuracyof the management earnings forecasts. From the respect of financial conditions, thedebt to asset ratio was negatively related to the accuracy of the management earningsforecasts and the return on assets was positively related to the accuracy of themanagement earnings forecasts; the company size and operating cash flow per shareshowed no significant relations with the accuracy of the management earningsforecasts.Finally, some suggestions were made based on the above analyses.