Social Media And The Market Reaction To Analysts’ Forecasts

As an important provider of financial information in the capital market,securities analyst is an important information medium in the capital market,they deliver future profit forecast information of listed companies to investors and provide them reference for investment decisions.by releasing research reports.However,in the current media convergence era with the rapid development of Internet and communication technology,the intervention of new media information service platforms such as social media has enriched the channels for market participants to obtain information,changed the supply pattern of financial information in China’s capital market,and also affected the original information media in the financial information field.Compared with analysts’ forecast information,social media information is not only clear and easy to get,and it has been proved that it contains not only "noise",but also a lot of effective information and information about the company’s characteristics,or "wisdom of crowds",and gradually attracts more and more investors’ attention and market reaction.As the traditional supplier of financial information,how will security analysts be affected in this process?Therefore,this focuses on China’s financial information market and explores the impact of social media information on the market reaction to the forecasting behavior of an analyst through a combination of theoretical analysis and empirical research.We select Shanghai and Shenzhen A-share listed companies with analyst forecast reports from 2018 to 2020 as the research samples,adopts event study method,with analysts predict release date for the event day,build a multiple linear regression model based on the cumulative excess return of stocks in the short-term event window period and the social media information from stocks BBS in East Money,to explore the influence of social media information on the market reaction to the forecasting behavior of a security analystBased on the empirical research,this paper draws the following conclusions: the social media information from stock forums has an adjustment effect on the market reaction to analysts’ forecast behavior,that is,the presence of social media information reduces the market reaction to analysts’ predictions to a certain extent.Moreover,social media information with different investor sentiment and influence has different adjustment effects on market reaction to analysts’ forecast behavior,and the market reaction to analysts’ forecast behavior for listed companies with different investor bases or in different event window periods will also react differently.At the same time,the research of this paper will help investors to have a clearer understanding of the relationship between the information of social media and professional security analysts,and combine these two kinds of information to fully tap effective information,so as to make reasonable performance expectations for listed companies and establish value-oriented investment decisions.Finally,based on the above research conclusions,we also put forward corresponding policy recommendations for different players in the market.