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Is Working Capital Information Useful for Financial Analysts? Evidence from China

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  • Jie Gao
  • Jiancai Wang

Abstract

Financial analysts are important information intermediaries in the capital market. This study investigates whether information about working capital management is useful for financial analysts of Chinese firms. With a sample of listed companies from 2004 to 2014, we find that the efficiency of working capital management is positively associated with the number of analyst following and analyst forecast accuracy, and negatively associated with analyst forecast dispersion. Specifically, when the cash conversion cycle becomes longer, number of analyst following and the accuracy of their mean forecasts decrease, while the forecast dispersion increases. The findings of this study indicate a potential mechanism through which information about working capital management is incorporated in stock price in emerging markets such as China.

Suggested Citation

  • Jie Gao & Jiancai Wang, 2017. "Is Working Capital Information Useful for Financial Analysts? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(5), pages 1135-1151, May.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:5:p:1135-1151
    DOI: 10.1080/1540496X.2016.1278166
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    Cited by:

    1. Hyunjung Nam & Won Gyun No & Youngsu Lee, 2017. "Are Commercial Financial Databases Reliable? New Evidence from Korea," Sustainability, MDPI, vol. 9(8), pages 1-23, August.
    2. Faisal Mahmood & Dongping Han & Nazakat Ali & Riaqa Mubeen & Umeair Shahzad, 2019. "Moderating Effects of Firm Size and Leverage on the Working Capital Finance–Profitability Relationship: Evidence from China," Sustainability, MDPI, vol. 11(7), pages 1-14, April.
    3. Feng Huang & Jie Gao, 2022. "Customer and Tax Avoidance: How Does Customer Geographic Proximity Affect a Supplier’s Tax Avoidance?," Sustainability, MDPI, vol. 14(22), pages 1-30, November.

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