IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v58y2022i10p3006-3022.html
   My bibliography  Save this article

Corporate Misconduct and Analyst Forecasting Accuracy: Evidence from China

Author

Listed:
  • Yuehua Zuo
  • Yuwei Hu
  • Xiaojun Liu
  • Huixian Zhao

Abstract

This paper studies the impact of corporate misconduct on analyst forecasting accuracy in emerging markets. Using a unique dataset from China, we find that analyst forecasting accuracy decreases when firms are involved in corporate misconduct. We address potential endogeneity by employing the propensity score matched (PSM) procedure and IV regression, and our findings are proven robust. Channel analyses show that corporate misconduct is related to the increased earnings management, weak internal control quality, the reduction in site visits by institutional investors and coverage by star analysts, indicating that our results are driven by a worsened information environment for analysts. Further tests reveal that firms who commit more corporate misconduct, more severe misconduct, or information disclosure violations result in less reliable analyst forecasting accuracy. Thus, our research provides policy implication by showing that corporate irregularities reduce information efficiency of capital market and disrupt the market integrity.

Suggested Citation

  • Yuehua Zuo & Yuwei Hu & Xiaojun Liu & Huixian Zhao, 2022. "Corporate Misconduct and Analyst Forecasting Accuracy: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(10), pages 3006-3022, August.
  • Handle: RePEc:mes:emfitr:v:58:y:2022:i:10:p:3006-3022
    DOI: 10.1080/1540496X.2022.2057220
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2022.2057220
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/1540496X.2022.2057220?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuehua Zuo & Xin Huang & Xiaojun Liu & Yunhao Dai, 2024. "Employee Stock Ownership Plans and Stockā€price Informativeness," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(3), pages 162-190, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:58:y:2022:i:10:p:3006-3022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.