Wei guo Xiao, Yu rui Huang
This Study extends prior research on analyst forecast and market price discovery. Based on data of Chinese stock market, I found that security analysts’ accuracy of earnings forecasts shows a weak maintenance and their accuracy increases with the boldness of their forecasts. Chinese analysts appear more cautious and show much more herding behavior than their counterparts of the developed markets. Positively biased forecasts are also observed in Chinese market and I proved that this can’t be explained by the skewness theory, which then leads to the fact that analysts don’t behave according to mean absolute error loss functions. However bold forecast do provide more information than herding forecasts after we control for firm, analyst and the other revision characteristics.