Business group and analyst earnings forecast: evidence from China

This study examines the economic consequences of financial analysts with business group concentration (analysts covering several member firms within a business group). Based on Chinese sample, we find that analysts covering one member firm within a group produce less accurate earnings forecasts. However, analysts covering several firms within a group predict earnings more accurately. Moreover, group concentration analysts provide superior earnings forecasts for those member firms when they share stronger information links. Furthermore, they are more likely to move to a bigger brokerage house after obtaining better forecasts. Finally, they help alleviate investors' inattention to information links among group-affiliated firms.