Can local fintech development improve analysts’ earnings forecast accuracy? Evidence from China

Abstract

This paper examines the impact of local fintech development on the accuracy of analysts’ earnings forecasts. We employ the method of web text mining to construct the local fintech development index for empirical test. Our findings indicate that local fintech development has a substantial positive impact on analysts’ earnings forecast accuracy by promoting firm digital transformation and alleviating the information asymmetry between firms and outsiders. Additionally, this effect is particularly pronounced for analysts without equity pledge affiliation and those with weaker buy-side pressure. This study shows that local fintech development can enhance the information environment of the capital market.