| Securities analysts play a complex role in China’s capital market.On the one hand,analysts provide more professional investment advice to institutional investors and retail investors by issuing analytical reports,acting as a bridge of information communication between enterprises and investors,and plays a role of information intermediary in the capital market.On the other hand,the financial disclosure behavior of analysts also brings excessive pressure to the managers of listed companies.When corporate performance doesn’t meet analysts’ expectations,management tends to focus more on corporation’s short-term performance for reasons of performance pressure,personal reputation,or corporate control,and thus may abandon long-term investments that increase corporate value and choose investments with negative net present value,reducing corporate investment efficiency.This paper uses multiple regressions to verify the impact of analyst following on corporate investment efficiency,and further studies the mediating role of performance pressure.In addition,the paper also studies the impact of analyst following on corporate investment efficiency under different property rights properties.Finally,the reliability of our results is further verified by using Ⅳ-2SLS to solve the endogeneity problem and conducting various robustness tests.The findings are that(1)instead of playing a governance role in the efficiency of corporate investment,analysts following reduce the efficiency of corporate investment;in particular,the higher the level of analyst focus,the firms more inclined to over invest.The results remain robust after controlling for endogeneity and using different methods to measure corporate investment efficiency.(2)Further mechanistic analysis reveals that performance pressure plays a mediating role between analyst focus and corporate investment efficiency.Securities analysts put excessive pressure on managers by setting external performance benchmarks(i.e.,earnings forecasts),and when corporations’ actual performance falls short of analysts’earnings forecasts,such short-term performance pressure will exacerbates management myopia,enabling management to invest in projects with negative net present value for short-term performance instead of invest in projects that increase corporate value,thus making the enterprise produce inefficient investment.However,it is undeniable that the improvement of analysts’ focus has a significant effect on the improvement of information transparency and the reduction of agency costs,and promotes the efficiency of corporate investment through these two channels.(3)This paper further explores the impact of analyst focus on corporate investment efficiency under different property rights properties by grouping regressions from property rights properties.The results show that the negative relationship between analyst focus and corporate investment efficiency is more pronounced in state-owned enterprises.When the actual performance of enterprises is less than expected,analyst focus can bring more performance pressure to state-owned enterprises,making them over-invest seriously.Based on the above findings,this paper proposes to improve the capital market information disclosure system,strengthen the industry regulation,raise the entry threshold,and improve the overall professional quality of analysts,and then optimize the investment and financing structure of enterprises. |
