Media Attention,investors' Sentiment And The Accuracy Of Earnings Forecasts By Securities Analysts

After more than 20 years' development,the stock market in our country has basically been in the “weak form efficient market”.Earnings forecasting activities done by securities analysts has always been a hot topic in academic circles at home and abroad.As a professional analyst in the securities market,securities analysts conduct a thorough investigation and study on the relevant listed companies,then giving the development prospects of the company presented in the form of reports,through their professional competence in the field of industry as well as their research and analysis capabilities which stronger than ordinary investors.The earnings forecasts of the company truly reflect the information contained in the intrinsic value of the securities,and are focus of their reports as well as one of the focuses of investors which can be an important reference for the investors' decision.Therefore,the accuracy of earnings forecasts given by the securities analysts is of great significance both for the investors' decision and the market's effectiveness.Although it is generally accepted that securities analysts are representatives of professional and rational in the securities market,based on the assumption of totally rational men in modern financial market theory,so that the overall market is rational.However,according to the theory of behavioral finance,there is no absolute rationality in the process of people's thinking,action and decision-making.People's behavior and decisions are influenced by psychological factors,so are securities analysts.According to EMH,the information happened in the past,present or even future has been reflected in the market prices,but this is based on the symmetry of information.According to the information asymmetry theory,there are many information asymmetries in the actual market,which would lead to a series of problems such as “moral hazard”,“adverse selection” as well as “free riding”,which would greatly reduce the market's efficiency.However,the media can reduce the asymmetric information coverage in the market and effectively improve the efficiency of information flowing in the securities markets,so that analysts can quickly and extensively obtain more information about listed companies,to make more accurate earnings forecasts,which would maintain the healthy development of the securities market.In addition,theories such as “anchoring effect”,“herd effect”,“overconfidence”,“bounded rationality” and “existential bias” in behavioral finance are reflected in the analysts' earning forecasting behavior,which was also been validated by many previous researchers,who also declared that overoptimism sentiment would effect securities analysts,resulting in bias in forecasts.Based on the above theoretical basis and previous research literature,this paper conducts empirical research on the impact of media attention and investors' sentiment on the accuracy of securities analysts' earnings forecasts,and draws the following conclusions:First,the role of the media as an information disseminator that can not be ignored by the stock market in our country is subtle and very influential to the stock market.It even influences the earnings forecasts of analysts to a certain extent.Empirical results show that the more media-focused on listed companies,the more accurate earnings forecasts that securities analysts would make.Second,securities analysts,who have been one of the representatives of rational investors in classical finance,are generally subjected to investor sentiment as the noise traders in behavioral finance when making their earnings forecasts.Analysts' earnings forecasts tend to be more optimistic on the whole due to the psychology of "overconfidence" and "existential bias".When investors' sentiment in the market is generally on the rise,analysts' earnings forecasts tend to be more optimistic.Thirdly,by grouping the overall samples according to the "media attention degree" and then regress respectively,we make the conclusion that for the listed companies with less media attention,the securities analysts' earnings forecasts are more likely to be affected by the market sentiment of investors,as a result,its accuracy is low.While the increase of media attention can restrain or even completely eliminate the influence of investor sentiment on analysts' earnings forecast bias.At the same time,based on the changes of some control variables,the increase of media attention on the one hand significantly enhances the analyst's independence,and then corrects the earnings forecast bias and improves the forecast accuracy.On the other hand,the increase of media attention can cause the improvement of analysts' attention,which indirectly improves the accuracy of analysts' earnings forecasts.