Analyst earnings forecast under complex corporate ownership in China

• This paper investigates stock analysts’ earnings forecasts under complex corporate ownership in China.
• State shareholding is negatively related to the quality of consensus analysts’ earnings forecasts.
• Tradable shares, A-shares, block tradable shareholdings, and institutional shareholdings improve forecast quality.
• Block shareholding is associated with lower probabilities of downward forecast revisions later in the year.
• The ownership structure reform of Chinese listed firms has led to an improved information environment overall.

This paper investigates stock analysts’ earnings forecasts under complex corporate ownership in China. Based on a sample of 1298 firms for years 2004–2011, our evidence suggests that state shareholding is negatively related to the quality of consensus analysts’ earnings forecasts. In particular, it is associated with stronger upward bias, and larger ‘inaccuracy’. We also show that higher percentages of tradable shares, A-shares, block tradable shareholdings, and institutional shareholdings improve forecast quality. Further robustness tests suggest block shareholding, irrespective of the shareholder type (state/tradable/institutional), is associated with lower probabilities of downward forecast revisions later in the year.