The Earning Forecasts:Performance Booster Or Fraud Catalyst?

With the continuous development of the securities market, the demand of investors for the information of the listed Corporation’s earnings forecast is growing strongly. Earnings forecast information in the current market is mainly from the management performance forecast and securities analysts’ earnings forecasts. As to ease the intermediary of information asymmetry, this should provide reasonable investment decision for investors; improve the efficiency of resource allocation, but people who are in the interest driven by ulterior motives use this as misappropriating tools. In recent years, the situation that Performance Face-off of Listed Companies in China is coming out in an unending flow. Thus bring huge losses to investors, and investigate its fundamental, we can’t help to think: if there are other behind the listed company?First of all, based on the Yunnan Lvdadi biological technology co., LTD as the research object, through the fact of the five performance change review, combined with performance management forecast and analyst earnings forecasts, we revealed the fact that:1.The management is self-interest, regarding money as the goal;2.The collusion between brokers and management make brokers manipulate the stock price;3.The securities analyst lack of independence, cooperate with management to publish misleading prediction. Secondly, based on the analysis of the economic consequences of the changes in the performance, we can find that the reasonable policy recommendations should be put forward. We believe that the case of the company’s internal governance structure defects, the management level of the punishment should be changed to increase, in the legal proceedings system and performance notice system should be supplemented and improved.Based on the theory of asymmetric information, the efficient market theory, theory of new capital requirements and the development of the performance forecast system in our country, with five performance changes of Lvdadi as the Angle, and analyzed the problem-reason-consequences. Use the unique Angle of view to a certain extent, enriched the study of the profit forecast of our country. In this paper, the hope is that the case caused the industry to the interest chain management- brokers-analysts, effectively protect the interests of investors, and promote the stable development of the securities market.