Political incentives and analyst bias: Evidence from China

• 成果类型: Article
• 署名作者: Pittman, Jeffrey; Yang, Zhifeng; Yu, Sijia; Zhu, Haoran
• 署名单位: Memorial University Newfoundland; Virginia Polytechnic Institute & State University; State University of New York (SUNY) System; Stony Brook University; Xi'an International Studies University; Southern University of Science & Technology
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12953
• 发表日期: 2024
• 页码: 1695-1725
• 关键词: CONFLICTS-OF-INTEREST; ELECTIONS; COMPETITION; management; forecasts; investors; DECISION; IMPACT; FIRMS

摘要

This study extends extant research on the determinants of financial analyst bias by examining the role that political incentives play. Using a series of scheduled provincial political events in China, we document that analysts are significantly more likely to issue favorable recommendations or revise their recommendations upward during political event periods, and the effect of political events on optimism is larger for analysts employed by brokerage firms affiliated with politicians. Cross-sectional evidence suggests that the impact of political events on analyst optimism is concentrated in those provinces where capital market development is a more important performance indicator for politicians or where the incumbent politicians face a pending promotion. Stock return analyses reveal that favorable recommendations issued during political event periods are significantly less profitable in the long run and are less credible according to investor perceptions. Reinforcing our main evidence, we also find that financial analysts are more likely to issue optimistic earnings forecasts during political event periods. Collectively, our results imply that political incentives distort analyst opinions and political-economic factors affect the corporate information environment in China. Motivations politiques et partialit & eacute; des analystes : donn & eacute;es provenant de la ChineCette & eacute;tude propose d'enrichir les connaissances actuelles sur les d & eacute;terminants de la partialit & eacute; des analystes financiers en examinant sp & eacute;cifiquement le r & ocirc;le des motivations politiques. En utilisant une s & eacute;rie d'& eacute;v & egrave;nements politiques programm & eacute;s au niveau provincial en Chine, les auteurs recueillent des donn & eacute;es indiquant que les analystes sont plus enclins & agrave; & eacute;mettre des recommandations favorables ou de reformuler leurs recommandations de mani & egrave;re plus positive en p & eacute;riode d'& eacute;v & egrave;nements politiques. L'effet des & eacute;v & egrave;nements politiques sur l'optimisme est plus marqu & eacute; chez les analystes travaillant pour des maisons de courtage affili & eacute;es & agrave; des politiciens. Les donn & eacute;es transversales sugg & egrave;rent que l'impact des & eacute;v & egrave;nements politiques sur l'optimisme des analystes se manifeste surtout dans les provinces o & ugrave; le d & eacute;veloppement du march & eacute; financier est un indicateur de performance plus important pour les politiciens, ou dans celles o & ugrave; ces derniers sont sur le point d'& ecirc;tre promus. Les analyses de rendements des actions r & eacute;v & egrave;lent que les recommandations favorables & eacute;mises en p & eacute;riode d'& eacute;v & egrave;nements politiques sont significativement moins utiles & agrave; long terme et moins cr & eacute;dibles selon les perceptions des investisseurs. Les donn & eacute;es consolid & eacute;es montrent & eacute;galement que les analystes financiers sont plus susceptibles d'& eacute;mettre des pr & eacute;visions de r & eacute;sultats optimistes en p & eacute;riode d'& eacute;v & egrave;nements politiques. Pris globalement, les r & eacute;sultats laissent croire que les motivations politiques alt & egrave;rent les jugements des analystes et que les facteurs politico-& eacute;conomiques affectent l'environnement informationnel des entreprises en Chine.