Non-State Shareholder’s Governance And Analyst Forecast Error

Since the 18th Party Congress,China is gradually promoting the reform of mixed ownership.More and more state-owned enterprises are following the trend of the times and joining the ranks of mixed ownership reform.As one of the key points of the reform of state-owned enterprises,mixed ownership reform is to integrate state-owned capital with non-state-owned capital to give full play to the advantages of different ownership systems,enhance the overall efficiency of enterprises and improve corporate governance.When non-state shareholders enter SOEs through mixed ownership reform,they have a strong desire to improve the corporate information environment in order to protect their own rights and interests so that they can better control and monitor SOEs.Information is an important player in the capital market.Having a good information environment within an enterprise can help it improve its governance efficiency,and investors have real and reliable information to help them make the right investment decisions.As an intermediary between the two,analysts can use their professional advantage to collect information to make surplus forecasts and guide investors in their decision-making,and the accuracy of analysts’ forecasts will affect the healthy development of the capital market.Based on this this paper examines the impact of non-state shareholder participation in governance on the bias of analysts’ surplus forecasts in the context of mixed ownership reform.This paper selects a sample of state-owned listed companies in Shanghai and Shenzhen from 2008 to 2020,and empirically examines the impact of non-state-owned shareholder participation in governance on analysts’ earnings forecasts in the context of the mixed ownership reform of state-owned enterprises,and conducts robustness tests on the relationship between non-state-owned shareholder participation in governance and analysts’ earnings forecast bias through substitution variables,sample replacement,the Heckman two-stage method and the instrumental variables method.test.On this basis,the possible paths of action are also analysed in terms of both information asymmetry and internal control.The results of the empirical study show that the participation of non-state shareholders in governance is effective in reducing the bias in analysts’ earnings forecasts,both in terms of shareholding structure and senior governance.Based on the mechanism of action analysis,it is found that:(1)the participation of non-state shareholders in governance reduces the degree of information asymmetry within and outside the company,which in turn reduces the analysts’ earnings forecast bias.(2)The participation of non-state shareholders in governance reduces analysts’ earnings forecast bias by improving the quality of internal control and creating effective supervision within the company.The paper further investigates the impact of non-state shareholder participation in governance on other aspects of analyst forecasts.It finds that non-state shareholder participation in governance attracts more analysts to follow,but does not have a significant impact on analyst forecast divergence,and that non-state shareholder participation in governance significantly reduces analyst optimism bias.In a heterogeneous study,the findings of this paper show that higher media attention increases the total amount of information available to analysts’ forecasts,making the synergistic effect of non-state shareholder participation in governance and media attention more significant;in a better legal environment,which is conducive to the protection of non-state shareholders’ rights,the effect of non-state shareholder participation in governance in reducing analysts’ surplus forecasts The effect of nonstate shareholder participation in governance in reducing analysts’ earnings forecasts is more pronounced in a better legal environment,which is conducive to the protection of the rights of non-state shareholders,and the effect of non-state shareholder participation in governance in reducing analysts’ earnings forecasts is more obvious.This paper firstly enriches the research on the participation of non-state shareholders in governance,and provides empirical evidence that mixed ownership reform can improve corporate governance in China.Secondly,this paper explores the mechanism of influence between non-state shareholder participation in governance and analysts’ earnings forecast bias,adding to the existing literature on the subject.Finally,the paper concludes that non-state shareholder participation in governance can effectively reduce analysts’ earnings forecast bias and help external investors to make better investment decisions using analysts’ forecast data.