| Summary: | 碩士 === 銘傳大學 === 會計學系碩士班 === 103 === The management will probably manipulate the accounting choices or manage the earnings through accruals or real activities while the firm suffers from financial difficulties. If the extent of earnings management becomes higher, the earnings persistence becomes smaller, and the earnings quality becomes lower. Recently, the accounting scandals attract attention from investors, creditors, and the government to put more emphasis on earnings quality. Based on prior literature, this study used earnings persistence to proxy earnings quality. Compared to investors, analysts have more professional expertise, are more capable of information collecting and can obtain more private information from firms’ management. Therefore, with more accurate analysts’ forecasts, the firm is less likely to beat the earnings benchmark by earnings management. The firms will thus have more persistent earnings. However, it is possible that managers release private information to induce analysts’ optimistic forecasts. Analysts may also release optimistic forecasts in order to build good relations with the management.
Based on prior literature, this study uses the listed companies in Taiwan from 2009 to 2013 as the sample and explores the association between the analysts forecast (proxied by forecast accuracy and optimistic forecast) and earnings persistence. The empirical results show that: (1) the higher analysts forecast accuracy is, the greater earnings persistence is. (2) There is no significant difference in earnings persistence between the firms with pessimistic analyst forecasts and those with optimistic forecasts.
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