State Media, Institutional Environment, and Analyst Forecast Quality: Evidence from China

Yanhui Jiang and Yun Hong

Emerging Markets Finance and Trade, 2021, vol. 57, issue 14, 3929-3943

Abstract: Analysts’ forecast quality in emerging markets is remarkably low and few influential factors are known. In this study, we use textual analysis to explore the impact of the state’s media – China Central Television (CCTV) – on analysts’ forecast quality. We find that analysts’ earnings forecasts are biased when CCTV news optimistically puts more emphasis on the economy, thus compromising the accuracy of the forecasts. CCTV’s impact is enormous in state-owned brokers and firms and firms facing less marketization. Investors can use CCTV’s impact on the analysts to act cautiously.

Date: 2021
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DOI: 10.1080/1540496X.2020.1766443

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