Can Tax Norm Improve the Information Environment of Capital Market?Evidence from Analysts'Earnings Forecasts
As an important external factor affecting the development of enterprises,tax management,such as optimizing the business envi-ronment in various aspects,has become the focus of government work.Since more than 90％of China's tax revenue comes from enterprises,it is required to optimize the reward and punishment mechanism in tax management.It is necessary to promote the tax norms of enterprises,en-sure national tax revenue,and improve the performance of enterprises,especially honest enterprises,promote the sustainable development of enterprises,and ultimately achieve the"win-win"between the govern-ment and enterprises.In July 2014,the State Administration of Taxation issued the measures for the administration of tax credit(Trial),which di-vided the tax credit rating of enterprises into five levels:A,B,M,C and D,and implemented hierarchical management and dynamic adjustment.The quality of analysts'earnings forecasts is an important component of information transmission efficiency in capital markets,with public information being a significant source for analysts.As the publicly dis-closed data of tax collection and administration units,tax credit rating can directly reflect the level of tax norms of enterprises.This prompts us to consider whether tax norms have an impact on analysts'earnings forecasting behavior.The answer to this question not only helps to deeply understand the practical impact of tax norms,but also expand the research results of analysts'earnings forecast.Based on the tax credit rating activities carried out by the State Taxation Administration,this paper examines the impact of tax norm(receiving an A-level tax credit rating)on the quality of analysts'earnings fore-casts using analyst earnings forecast data of Shanghai and Shenzhen A-share listed companies from 2015 to 2023.The results show that:(1)Tax norm significantly improves the accuracy of earnings forecasts and reduces the optimism of earnings forecasts.The above results still hold after considering the differences in company size and analyst ability.(2)Differentiating by firm characteristics and industry characteristics,the positive effect of tax norm on the quality of analysts'earnings forecasts is more pronounced when the firm's business complexity is higher and the industry concentration is lower.(3)Differentiating by time charac-teristics,tax norm has a greater informational content in later disclosure periods.(4)Further explorations reveal that tax norm enhances account-ing information quality and reduces the degree of stock mispricing.The results show that tax norms not only help to increase the amount of information obtained by analysts,but also help to improve the quality of information obtained by analysts.Information effect and governance effect play a role at the same time,so that analysts can obtain more in-formation related to enterprise value at low cost through open channels,improve the information environment of capital market,and enable analysts to better play the role of information intermediary.The main contributions of this paper are as follows.First,from the perspective of public intervention,this paper expands the research on the factors affecting analysts'earnings forecasts.The existing literature focuses on the impact of margin trading system,new income standards and anti-corruption policies on the quality of analysts'earnings forecasting,while there is relatively little discussion on how tax policy affects analysts'earnings forecasting behavior.Starting from the perspective of tax credit rating system,a new source of information disclosure,this paper discusses the impact of tax norms on the quality of analysts'earnings forecasts from the perspective of government agencies disclosing corporate tax behavior.The paper shows that tax norms not only provides incremental information to the market,but also improves the quality of information,and ultimately improve the quality of analyst earnings forecasts,which provides an important supplement to existing research.Second,this paper adds more comprehensive evidence for the economic consequences of the tax credit rating system from the perspective of analyst earnings forecasting.Existing studies have mainly focused on the micro enterprise level to explore the impact of tax credit rating on financing constraints,innovation output,corporate performance,audit fees and other aspects,but have not yet involved analysts,an important information medium of capital market.From the perspective of the qual-ity of analysts'earnings forecast,this paper studies the economic conse-quences of enterprise tax behavior,and finds that analysts can identify the positive impact of enterprise tax norms,indicating that there is an obvious spillover effect of tax norms,which makes up for this gap to a certain extent.Third,this paper provides a useful reference for government depart-ments.At present,the State Administration of Taxation only publishes the A-level tax credit list,and can only compare and analyze A-level enterprises and non-A-level enterprises.This paper finds that the impact of tax norms is not limited to the inside of enterprises,but spills over to the whole capital market.Therefore,government agencies can consider gradually opening up the list of enterprises of other grades such as B,C,D and M,or giving enterprises,individuals and investors in need the right to submit applications for approval and inquiry after explaining their purposes,deepening reward and punishment policies,and further improving the tax credit rating system.This can not only encourage list-ed companies to standardize tax payment,but also promote the quality of analysts'work,improve the pricing efficiency of the capital market,and finally achieve a win-win situation for listed companies,govern-ment departments,analysts and investors.From the perspective of earn-ings forecasting,analysts need to take the initiative to capture enterprise information,enhance professional analysis literacy,and optimize the information environment of the capital market.The capital market is a market of information,and tax norms improve analysts'earnings fore-cast performance by providing additional information to the market,which provides certain theoretical evidence for the information effect of tax credit rating system,and also supports that tax credit rating system plays a positive role in promoting analysts'professional interpretation ability from another point of view.Analysts should improve their aware-ness of the importance of information disclosure,actively tap publicly released enterprise information,improve the accuracy of earnings forecast,and reduce the optimistic deviation of earnings forecast,so as to give full play to the role of information processing intermediary,and ultimately promote the healthy and stable development of capital market.
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