Does individual investors’ dividend tax influence analyst forecast? Evidence from a quasi-natural experiment in China

Guangqiang Liu and Tianbao Liu

Finance Research Letters, 2022, vol. 50, issue C

Abstract: Taking the implementation of dividend tax reform (DTR) for individual investors as a quasi-natural experiment, this paper analyzes the effect of individual investors’ dividend tax on analyst forecast using difference-in-differences model. The results show a significant decrease in the accuracy of analysts’ forecasts after the implementation of DTR, mainly exacerbating the optimistic bias of analysts. Further analysis indicates that this effect is more pronounced for firms with poorer information quality and firms with less private information. Our study provides theoretical support and empirical evidence for regulators concerned with information asymmetry of capital market and investor protection.

Keywords: Dividend tax reform; Analyst forecast; Individual investor; Analyst visit; Information quality (search for similar items in EconPapers)
JEL-codes: G17 G24 G35 K34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004494

DOI: 10.1016/j.frl.2022.103263

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