Can Institutional Analysts Identify Non-financial Information Manipulation? Evidence from China

Abstract

Based on the data of Chinese listed companies from 2009 to 2023, this paper examines analysts’ ability to discriminate distorted information by examining the sensitivity of analysts’ earnings forecast correction behavior to textual readability. The empirical study found that China’s securities analysts have a certain screening ability for the non-financial information disclosed by listed companies based on the motivation of interest encroachment. Through robustness analysis, the above conclusion is still significant. The conclusion of this paper provides theoretical reference and policy enlightenment for improving China’s non-financial information disclosure system and alleviating the distortion of information disclosure.