Financial analysts in China

Huifang Yin and Huai Zhang

Chapter 11 in Research Handbook on Corporate Governance in China, 2025, pp 226-242 from Edward Elgar Publishing

Abstract: Financial analysts are important information intermediaries and play a significant role in the Chinese capital market, which has attracted considerable attention from researchers. In this chapter, we first provide an overview of the sell-side analyst profession in China and then review the relevant literature in accounting and finance. Our literature review consists of three non-mutually-exclusive sections. The first section discusses how China's unique formal and informal institutions impact financial analysts. The weak institutional environment creates challenges for analysts to acquire and produce high-quality information. However, informal institutions, such as social connections, serve as a substitute for formal institutions and influence analysts’ behaviors. The second section reviews the literature on the informational role of financial analysts in the Chinese capital market. Chinese financial analysts produce firm-specific information, have a significant market impact, and monitor misreporting behaviors. However, their informational role is handicapped by brokerage firms’ business and political incentives. In the third section, we highlight research motivated by unique data, mainly on individual analyst data provided by the Securities Association of China, site visit data, and trading commission allocation data. We conclude by discussing policy implications and offering suggestions for future research.

Keywords: Financial analysts; China; Institutional environment; Chinese capital market; Information intermediaries; Political incentives (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035312603
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