Regional Integrity and Analyst Earnings Forecast Accuracy:Evidence from A-share Listed Companies
This paper investigates uses the effect of integrity,as an informal system,on analysts'earn-ings forecast accuracy by the sample of A-share listed companies from 2007 to 2018 relying on the judgment documents of the fraud cases in the prefecture-level cities crawled from Peking University Law Database to con-struct the annual integrity level of the corresponding cities.The empirical results show that:(1)Analysts demonstrate less divergence and average error in the earnings forecasts of listed companies in the region with a higher level of integrity.The effect is more pronounced in the samples of the state-owned enterprises,the re-gions with low level of internal governance and those with low level of financial development,indicating that regional integrity can partially substitute the influence of ownership,internal governance level and level of fi-nancial development on the accuracy of analysts'earnings forecasts.(2)Mechanism test reveals that regional integrity reduces the average forecast error and divergence of analysts by improving the quality of information disclosure of listed companies.Therefore,integrity can improve the construction of the integrity system in today's society,create a good business environment and atmosphere,reduce information asymmetry and reduce analysts'forecast errors,which is of great significance to the high-quality development of the capital market.
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