Research On Chinese Pharmaceutical Listed Companies Earnings Forecast Correction

Earnings forecast has a huge amount of information,which is beneficial to reduce information asymmetry.Earnings forecast correction refers to the listed company repeatedly revised its earnings forecast.In the first half of 2017,although 36 companies in China’s A-share market have revised their earnings forecasts to positive results,47 companies have revised their forecasts to negative results which is the worst performance in nearly two years.It shows that the information disclosure system is imperfect and not transparent,especially when the difference between the actual situation and the earnings forecast is too large,revising earning forecast to negative result will cause the stock price to fall,which will hurt the interest of investors.As a typical example of the performance of the listed company,Shanghai RAAS performance on July 14,2018,its 12 th performance forecast since the listing,changed the expected loss of 43.735~65 million RMB from the first half of 2018 to increase the loss to 660.78~873.4 million RMB.Shanghai RAAS explained that due to the current domestic securities market volatility,the company’s venture capital losses,resulting in changes in the fair value of the company’s investment business and investment income decreased significantly compared with the same period of the previous year,resulting in a loss of performance,thus leading the company’s performance earnings forecast correction.Therefore,this paper firstly sorts out the domestic and foreign literatures from the two aspects of the performance warning and economic consequences.By expounding the development of Chinese performance forecasting system and related theories,comparing the foreign performance forecasting system,and exploring the characteristics of Chinese performance forecasting system.Based on the new medical reform policy in China,Shanghai RAAS is the research object of the case study and analysis of its performance earnings forecast,revealing the economic consequences of Shanghai RAAS’s performance forecast and the reasons for its formation.Based on this,it proposes government supervision and corporate governance.Feasible suggestions for investor decision-making.The research in this paper finds that Shanghai RAAS’s explanation of his performance loss and the performance forecast correction may be to cover up his own development dilemma,but not a deep reason.The explanations given by Shanghai RAAS’s for the large correction of its performance forecast are that the fluctuation of domestic securities market causes the company’s investment to change from earnings to negative,and the implementation of the new health care reform policy affects the company’s original business model.All kinds of external causes cause the shareholder’s net profit of the company’s ultimate ownership parent company to decrease significantly.However,this is not the real major reason why Shanghai RAAS’s made the huge performance forecast correction.Since the implementation of the new health care reform policy,many policies have not been implemented simultaneously and suddenly,they have been gradually promoted in the pilot process.Only Shanghai RAAS listed it as an important reason for the significant "face change" of the company’s performance forecast.Management’s radical business strategy,large changes in sales channels,and insufficient momentum of decline and development of operating income are the deep-seated reasons for the recurrence of correction in performance forecasts.Financial instability,operational instability,strategic instability,and management instability are the underlying reasons for the repeated change in their performance forecasts.Therefore,the following suggestions are proposed: first,establish and improve legal norms;second,establish a scientific rating system;third,integrate regulatory power;fourth,strengthen management of listed companies;fifth,investors should be more cautious.