The Effect Of Analyst Forecast Revisions On Market Reaction Of Unexpected Earnings

With the opening up and the market-oriented economic reform of various countries,the capital market has been continuously standardized and developed.In an increasingly complicated capital market,relying on accounting information alone has been unable to meet the information needs of market participants.Therefore,well-developed information intermediaries and sophisticated investment communities.are also required group.The simultaneous and coordinated development of various factors can ensure the effective operation of the capital market and realize its resource allocation function.As a professional seller analyst in the securities market,it uses keen insight and unique information mining processing capabilities to deliver effective information to the capital market so that investors can make effective investment decisions.However,compared with the mature capital markets in the west,the capital market is developing relatively lately in China.The depth and breadth of the forecasts of the analysts need to be further improved.Can they help investors interpret the earnings announcement information and ease the asymmetric information so as to promote the sustained and healthy development of the capital market as western scholars have studied?Therefore,from the perspective of the sender of information,this paper explores the implications of kinds of analyst forecast revisions issued during earnings announcements(day0 and day +1)on the market response to unexpected earnings combining theory and evidence.In this paper,the author uses a normative approach to analyze the recent research on the subject of analyst forecast revisions and unexpected earnings in China and abroad firstly,and then draws the content of this study.Then,this paper uses the method of event study and takes the earnings announcement day as the event day.The author selects the Shanghai-Shenzhen A-share listed companies that published the seller's earning forecasts from 2001 to 2016 as the initial samples and selects them according to the rules.And the paper analyzes the impact of analyst forecast revisions on earnings reaction coefficients during earnings announcements and then analyzes the impact of analyst forecasts on earnings response coefficients for different window periods and different analyst opinions by establishing the multiple regression model.Through empirical research,this paper draws the corresponding conclusions:(1)In the event of a short period of time,when announcements accompanied by reinforcing analyst forecast revisions,the market response to the unexpected earnings increases significantly.But when announcements accompanied by contradicting analyst forecast revisions,the market response to the unexpected earnings did not significantly diminish;(2)During the longer window period,no matter what type of analyst forecast revisions issued during the earningsannouncement,the earnings response coefficient has no significant effect;(3)Analyst forecast characteristic affects investor responses to earnings announcements accompanied by analyst forecast revisions.In short,in the capital market of China,analyst forecasts issued during the earnings announcement window providing effective information that aids investors' interpretation of the information in unexpected earnings.However,the analyst forecast depth and breadth needs to be improved.Based on the conclusion of this paper,the author puts forward some corresponding policy recommendations and summarizes the limitations of the paper and the future research directions.This paper not only helps investors to evaluate the company's future performance by combining analyst forecast revisions information and earnings announcement information,but also facilitates analysts to play their role of information intermediary,so as to improve the effectiveness of capital market and make the capital market develop continually and healthily.