China Accounting and Finance Review

, 17:10

First online:

Open Access This content is freely available online to anyone, anywhere at any time.

Is Forecast Capability Important? Evidence from the Selection of Best Analysts in China*

  • Yi QuanAffiliated withAccounting Department, Nanjing University
  • , Shangkun LiangAffiliated withSchool of Accountancy, Central University of Finance and Economics Email author 


Using a sample of analyst forecast data for Chinese A-share listed companies from 2003 to 2012, this paper examines the role of forecast accuracy, optimism, and consistency in the selection of best analysts made by New Fortune magazine. The results indicate that both forecast accuracy and optimism play important roles in the selection of the best analysts. Both forecast accuracy and optimism increase the probability of being selected as the best analysts in the current year and also increase the probability of being selected the following year. However, the role of consistency is not a significant factor in the selection. Further analysis finds that (1) in respect of companies with high earnings volatility, forecast accuracy plays a greater role in the selection; (2) when the market is in better condition, forecast accuracy and optimism both play greater roles in the selection; and (3) for analysts in small brokerages, forecast accuracy and consistency play greater roles in the selection. This paper clarifies the mechanisms of best analyst selection to some extent and offers a solid base for future research.


Best Analyst Accuracy Optimism Consistency