Weibo, Information Disclosure and Analysts' Earnings Forecasts

Hu Jun, Wang Zhen, Tao Ying, Zou Junqi

Journal of Finance and Economics Vol. 42, Issue 05, pp. 66 - 76 (2016)  DOI:10.16538/j.cnki.jfe.2016.05.006

Abstract

The development of information technology and social networks leads to changes in the amount, types and transmission routes of information. As the most professional information users, it is no doubt that security analysts are influenced by this change. This paper studies the effect of the usage of Weibo among companies on analysts' earnings forecasts. It arrives at the conclusions as follows: firstly, the frequency of analysts' earnings forecasts revisions increases after the launch of Weibo, showing that analysts can use Weibo information to timely revise earnings forecasts; secondly, the average earnings forecasts error and dispersion both decrease after the launch of Weibo, showing that the information disclosed through Weibo is an important source helping to develop analysts' earnings forecasts and is beneficial to better understanding and analysis of corporate operation activities; thirdly, the sensitivity of stock prices to analysts' earnings forecasts revisions increases after the using of Weibo. One possible explanation for this phenomenon is that individual investors cannot fully understand the information disclosed through Weibo, and analysts can help them to understand the information disclosed through Weibo. These conclusions have the reference for the formulation of information disclosure criteria through social networks based on Weibo and the exertion of the role of analysts to the largest extent in information pricing efficiency in capital market.

Keywords

Weibo; nonfinancial information; security analyst; earnings forecast