On The Impact Of Media Coverage To The Accuracy Of Analysts' Forecast

With the continuous development of the capital market,the role of the analyst as an information intermediary is becoming more and more important.Previous studies have shown that the source of information is an important factor affecting the accuracy of analysts' forecast.On the one hand,the media coverage makes analysts to obtain new data to improve the accuracy of analysts' forecast.On the other hand it may also bring the miscellaneous information,thereby reducing the accuracy.Then,the impact of media coverage to the accuracy of analysts' forecasts is a question to be proved.In this paper,the analysts' forecast data of A-share listed companies in Shanghai and Shenzhen stock exchange are taken as the research sample,and the factors that influence the relationship between media coverage and the accuracy of analysts' forecast are tested.This research indicates that the higher the media coverage to a listed company,the higher the accuracy of forecasts about it,which demonstrates a positive correlation between the media coverage and the accuracy of analysts' forecast.And furthermore,from the perspective of the analysts,who can be divided into two groups,this correlation exists only in the group of non-star analysts while not in the star analyst group;From the perspective of the quality of accounting earnings information of a listed company,which is graded as different levels,when the information quality is poor,the above-mentioned correlation exists,while not when the information quality is good.From the perspective of the institutional environment for a listed company,which can be evaluated as favorable or unfavorable,the above-mentioned correlation exists only when the institutional environment is favorable.It shows that the role of media is constrained by the institutional environmentAccording to the findings of this research,there are three policy suggestions:(I)To intensify the supervision of the analysts so as to improve the accuracy of their forecasts.Then their role as the intermediary would help improve the information transmission efficiency and thus promote the allocation efficiency of the resources on capital market;(II)To strengthen the supervision of financial information of the listed companies through proper disclosure of information about them and control of the information asymmetry,in order to lower the cost of information acquisition and interpretation;(III)To provide a better institutional environment for the media.The main innovation of the paper lies in: Based on the existing literature on the relationship between the media and analyst forecasts,this paper from three perspectives analyst individual characteristics,individual characteristics of the company and the external environment,further researches the limiting condition or effect on the impact of media coverage to the accuracy of analysts' forecast factors,expanding the scope of the related literature,providing empirical evidence for more understanding the role of the media in the capital market.