Securities market quality and analysts' earnings forecast errors

Abstract

This study investigated the influence of securities market quality on analysts' earnings forecast errors. Companies listed on the Taiwan Stock Exchange (TWSE) between 2009 and 2011 were used as the research sample. The empirical results indicated that with rising securities market trading quality, analysts' earnings forecast errors reduced significantly. This suggested that a low information asymmetry signifies an increase in the accuracy of analysts' earnings forecasts. In addition, when trading quality in the securities market increases, the volatility of analysts' forecast error decreases and the perspectives of securities market analysts on the future of a single share gradually converge. The empirical results obtained in this study can provide competent authorities with a reference for increasing securities market trading quality which assists securities market analysts in forecasting accurate earnings.