On the value relevance of analyst opinions and institutional shareholdings in China

Wei Huang, Agyenim Boateng

    Research output: Contribution to journalArticle

    Abstract

    Purpose
    This paper aims to examine the relevance of stock analysts’ opinions and institutional investors’ shareholding to the value of Chinese firms.

    Design/methodology/approach
    The authors use both internal and external corporate governance mechanism to investigate value relevance of analyst opinion and institutional shareholding to Chinese firms.

    Findings
    The authors find that Tobin’s Q is positively related to analysts’ consensus forecast optimism and institutional investors’ shareholding but negatively related to analyst forecast dispersions. Further analysis using subsamples of partially state-owned enterprises and non-state-owned firms indicate that institutional investors have significant impact on firm value for all firms irrespective of the ownership type, whereas analyst forecasts opinions appear to have significant effects on partially state-owned firms but insignificant effects on non-state-owned firms. The results also show that internal governance appears to be an important pre-requisite that affects analysts’ forecast opinions and that good internal governance reinforces external governance mechanism to create firm value.

    Originality/value
    Studies analysing the effects of both internal and external mechanisms on firm value in emerging economies are scant. This study attempts to extend and contribute to this line of research by investigating the relevance of institutional investors and stock analysts’ opinion to firm valuation.
    Original languageEnglish
    Pages (from-to)206-225
    Number of pages20
    JournalInternational Journal of Accounting and Information Management
    Volume24
    Issue number3
    DOIs
    Publication statusPublished - 2016

    Keywords

    • China
    • corporate governance
    • firm value
    • institutional investors
    • analysts
    • G15
    • G32
    • G34

    Fingerprint Dive into the research topics of 'On the value relevance of analyst opinions and institutional shareholdings in China'. Together they form a unique fingerprint.

  • Cite this