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Common institutional investors and the quality of management earnings forecasts—Empirical and machine learning evidences

Based on the data of the Chinese A-share listed firms in China Shanghai and Shenzhen Stock Exchange from 2014 to 2021, this article explores the relationship between common institutional investors and the quality of management earnings forecasts. The study used the multiple linear regression model a...

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Detalles Bibliográficos
Autores principales: Yang, Shanshan, Li, Xiaohan, Jiang, Zhenhua, Xiao, Man
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10578582/
https://www.ncbi.nlm.nih.gov/pubmed/37844110
http://dx.doi.org/10.1371/journal.pone.0290126
Descripción
Sumario:Based on the data of the Chinese A-share listed firms in China Shanghai and Shenzhen Stock Exchange from 2014 to 2021, this article explores the relationship between common institutional investors and the quality of management earnings forecasts. The study used the multiple linear regression model and empirically found that common institutional investors positively impact the precision of earnings forecasts. This article also uses graph neural networks to predict the precision of earnings forecasts. Our findings have shown that common institutional investors form external supervision over restricting management to release a wide width of earnings forecasts, which helps to improve the risk warning function of earnings forecasts and promote the sustainable development of information disclosure from management in the Chinese capital market. One of the marginal contributions of this paper is that it enriches the literature related to the economic consequences of common institutional shareholding. Then, the neural network method used to predict the quality of management forecasts enhances the research method of institutional investors and the behavior of management earnings forecasts. Thirdly, this paper calls for strengthening information sharing and circulation among institutional investors to reduce information asymmetry between investors and management.