Corporate Strategic Radicalization and the Quality of Analysts’ Forecasts: A Moderated Mediation Model

Abstract

This paper examines the impact of corporate strategic radicalization on the quality of analysts’ forecasts and the moderating effect of the effectiveness of internal control by using the data of A-share listed companies from 2008 to 2018 in Shanghai and Shenzhen. The following research results were obtained: Both the error and dispersion of analysts’ forecasts are significant negative with the corporate strategic radicalization; A higher internal control quality can promote the role of strategic radicalization in improving the quality of analysts’ forecasts; The mechanism analysis shows that corporate performance may be a channel by which strategic radicalization works. Further, internal control quality also moderated the mediating effect of corporate performance in the relationship between strategic radicalization and the quality of analysts’ forecasts. The research results further enrich the existing literature on the impact of corporate strategy on analysts’ forecasts, which is conducive to alleviating the negative impact of analysts’ forecast bias.