Can Analysts Improve Stock Liquidity In China

Stock liquidity is the embodiment of the efficiency of the securities market,and the market lacking stock liquidity will lose its foundation.A market with abundant stock liquidity can effectively optimize resource allocation and help investors flexibly adjust their investment portfolios.For enterprises,better stock liquidity performance prompts the company to improve its governance level and business performance to enhance its own value and promote a virtuous circle of enterprise development.Observing China's securities market,the development of the past 30 years can be regarded as tempering,stock liquidity is also repeatedly hit,in the near future,the 2008 financial crisis and the 2015 Events have caused stock liquidity to fluctuate abnormally.In these incidents,information plays an important role in it.Due to information asymmetry,investors do not understand the market tendencies and policies,irrational investment behavior plants the seeds of the crisis;Since the firms was not received correct stock liquidity feedback,management and decisionmaking mistakes were made,the fate of the crisis was further exerted.So whether to improve the transparency of company information can effectively avoid the crisis and ensure the effectiveness of stock liquidity? One of the roles of analysts as information mediators is to reduce the degree of market information asymmetry.It is self-evident to explore the impact of analysts on the liquidity of stocks.Taking the data of all A-share listed companies in the period of 2007-2017 as a sample,the influence of analysts' attention and forecasting effect on liquidity is explored,and relevant conclusions are made and suggestions are made.First of all,we sort out the stock liquidity and its influencing factors,analyst forecasts and corporate governance,and lays a theoretical foundation for the empirical analysis of this paper.In the data analysis part,we conduct a basic analysis of stock liquidity,analysts' attention and forecasting effects,and conducts preliminary analysis of the differences between different enterprises,laying the foundation for subsequent empirical tests.In the empirical analysis part,we make a detailed study on the influence of analysts' attention and forecasting bias on stock liquidity.The results show that:(1)Under the condition of controlling the influence of other factors,the higher the analyst's attention,the more stock liquidity.The analyst attention can significantly improve stock liquidity;(2)The larger the forecast bias and disagreement of the analyst,the better the stock liquidity,which indicates that analysts have certain private information trading preferences;(3)This paper explains the analyst's forecast to improve the company's stock flow through the information mechanism.We find that analysts' attention can significantly improve the transparency of information and improve the market efficiency.Further,this paper analyzes the heterogeneity of analysts' impact on stock liquidity from four perspectives: the nature of the company,the size difference,the region and the location of the listing.We find that analysts focus on the impact of non-state-owned and small company stock liquidity,but there is no significant difference between the region and the listing location.In the robustness test part,this paper tests the empirical results from four aspects: endogenous problem,the choice of regression method,the influence of major abnormal events and the replacement of measured variables of explanatory variables.The conclusion of the study is still consistent with the main regression,indicating that the conclusion of this paper is steady.Finally,the paper proposes relevant recommendations from three different perspectives: government and regulatory agencies,enterprises and investors.This paper explores the impact of analysts on stock liquidity from the two dimensions of analyst attention and forecasting effect,and clarifies the role of analysts in improving the information environment,thus enriching the relevant literature.It also provides support for regulators,companies,and investors on how to treat analyst information.In addition,the paper also discusses the impact of the nature,scale and location of the enterprise on the related relationship,which provides a reference for the development and construction of listed companies and enterprise reform.